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Russian IT firm Softline plans $400 million London IPO

By Reuters

By Alexander Marrow

MOSCOW -Russian IT company Softline on Thursday said it plans to raise around $400 million in an initial public offering (IPO) on the London Stock Exchange, with a secondary listing in Moscow, joining a raft of Russian firms planning market debuts.

Russian IPO activity, hit by the COVID-19 pandemic last year, is picking up pace as the economy improves and concerns over fresh Western sanctions fade. The Moscow Exchange expects to hold 10 share listings by the end of the year.

Softline, headquartered in London and operating in more than 50 countries, is the second Russian firm this week to announce its intention to list, after Renaissance Insurance on Monday.

Three financial market sources told Reuters on Thursday that Mercury Retail, an umbrella group for alcohol beverages chains Krasnoe & Beloe and Bristol, is aiming to raise over $1 billion in an IPO in Moscow by year-end.

Softline said its offer would mainly consist of primary shares issued by the company with existing stock to be sold by certain existing shareholders as global depositary receipts (GDR).

The company is targeting a valuation of around $2 billion, with a free float of 20-25%, according to a person familiar with the matter.

The majority of Softline’s turnover comes from software and cloud, but the company also has expertise in cybersecurity, machine learning and big data.

Turnover for the financial year 2020-21 stood at $1.8 billion, with 40% of that from markets outside Russia.

Igor Borovikov, chairman and founder, said in a statement that the proceeds will allow Softline to develop and execute its growth strategy – a combination of organic expansion and M&A transactions.

That strategy also concerns developing expertise and expanding within emerging markets, CEO Sergey Chernovolenko said in a recent interview, while keeping an eye out for opportunities in developed economies in western Europe and north America.

“Compared with developed markets, GDP growth is twice as fast (in emerging markets) and IT penetration is around 3-4 times lower,” Chernovolenko said.

Credit Suisse, J.P. Morgan and VTB Capital are acting as joint global coordinators and joint bookrunners. Alfa Capital Markets, Citigroup, Gazprombank and Sberbank CIB are acting as joint bookrunners, Softline said.