The market will be flooded with alcohol // “Red & amp; white “plans an IPO

Ozon’s and Fix Price’s last year’s listing success pushed other retailers to follow this path. As it became known to Kommersant, Igor Kesaev, Sergei Katsiev and Sergei Studennikov, after the closing of the deal to sell Dixy to Magnit, will prepare for the IPO of their chain of alcohol stores, Krasnoe & Beloe. While the business of the retailer can be estimated at 245 billion rubles.

Mercury Retail Group hired E&Y to conduct due diligence of the Red & White chain (8.8 thousand points at the end of 2020) before its possible IPO, a source in the grocery retail market told Kommersant. A source of Kommersant in investment circles also speaks about the possible placement of the retailer’s shares on the stock exchange. According to him, now the owners of the chain are discussing several parameters: the size of the IPO may be 15–20% with the prospect of additional placement. Taking into account the SPO, 25-30% of the retailer’s shares may be in free float. E&Y declined to comment. The press service of “Red & White” could not confirm the information.

Indirectly, the preparation of “Red & White” for the IPO is indicated by the transfer to the company to a similar position of Andrey Vasin, head of the corporate finance and investor relations department of X5 Retail Group. This was reported by two interlocutors of Kommersant in investment circles. It was not possible to contact Mr. Vasin. X5 Retail Group only confirmed the departure of a top manager from the company.

The Red & White network was founded in 2006 by a businessman from Chelyabinsk, Sergei Studennikov. In 2018, the company overtook Magnit in growth rates. But in December of the same year, the network was paralyzed due to searches by the Federal Tax Service. A month later, it became known that the owners of the Dixy Group and the Bristol chain of stores, Igor Kesaev and Sergey Katsiev, agreed with Sergey Studennikov to merge their assets into the Mercury Retail Group, where 51% went to Messrs. Kesaev and Katsiev, 49% to Mr. Studennikov. Now the group is selling Dixy to Magnit for about 92.4 billion rubles. The FAS gave its consent to the deal on 15 July.

According to one of Kommersant’s interlocutors, Mercury Retail Group is counting on the assessment of the business of “Red & White” at the level of 0.5 of the chain’s revenue. “These are conservative expectations,” he says. According to Infoline, the network’s revenue in 2020 amounted to RUB 490 billion. Thus, the entire business of the network can be estimated at 245 billion rubles.

Marat Ibragimov, senior analyst at Gazprombank, believes that Mercury Retail Group would be more logical to bring the combined chains Krasnoe & Beloe and Bristol to the stock exchange. “The larger the company, the larger the amount of capital offered to portfolio investors and the higher the liquidity of the shares,” he says. Olga Sumishevskaya, partner of One Story, explains that both alcohol market chains are independent assets with a complex ownership structure.

IPO parameters may be similar to the Fix Price configuration (about 20% of the company’s shares are traded on the stock exchange), Mr. Ibragimov believes, although the profitability of wine chains is higher than that of food retailers. Thus, the EBITDA margin of Vinlab (part of the Beluga Group) amounted to 11.8% in 2020, follows from the group’s reporting.

“Krasnoe & Beloe” maintains high growth rates, unlike other players in this segment, says Olga Sumishevskaya. If online trade in alcoholic beverages is allowed in Russia, then “Red & White” will expect an explosive growth of business, which will also affect the interest of investors in the company, said Mikhail Burmistrov, general director of “Infoline-Analytics”. After a series of successful IPOs Ozon and Fix Price, investors began to look differently at assets in the retail sector, the expert says. Given this interest, he suggests, “Red & White” by the end of 2021 may hold an IPO.

Nikita Shchurenkov, Ilya Usov, Khalil Aminov

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