TPGs Lenta prepares 1bn IPO

The TPG- and VTB-backed Russian hypermarket plans to list in London.

Russian hypermarket retailer Lenta has set a price range for its initial public offering on the London Stock Exchange, which could raise more than $1 billion.

Lenta said in a statement that it would price somewhere between $9.50 and $11.50 per one global depositary receipt, where five GDRs equate to one Lentz share. That implies a market capitalisation of over $4 billion.

Lenta’s majority shareholders are TPG – which owns a stake of just under 50 percent – VTB Capital PE and the European Bank for Reconstruction and Development. All three will be selling some of their shares via the IPO, Lenta said today.

The business currently operates 77 hypermarkets in 45 cities across Russia plus 10 supermarkets in the Moscow region, making it Russia’s second-largest hypermarket chain, according to the company’s website.

TPG, VTB and EBRD invested in Lenta in 2011 in a $1.1 billion transaction. It was the largest private equity deal agreed in the country for three years and exceeded the total amount of investment in Russia in all of 2010.

Lenta's IPO is expected to raise at least $1 billion, tapping demand from investors for consumer-focused businesses buoyed by Russia's rising middle class.

Lenta’s IPO forms part of a growing trend towards private-equity backed IPOs in Europe. In 2012, a mere five of the 103 private equity-backed IPOs globally were in Europe, according to Ernst & Young. In 2013, according to London Stock Exchange data, there were 26. In London alone, 14 sponsor-backed offerings collectively generated more than $7 billion in proceeds for the GPs concerned.

According to Russian newspaper Kommersant, the investor roadshow starts today and will last for two weeks.

At press time, TPG and VTB could not be reached for comment.