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Integra brochure
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September 23, 2009

Integra found its window

Vedomosti newspaper
Irina Malkova, Tatiana Bochkareva

Issuers all around the world are rushing to capitalize on investors’ optimism and place their stocks. Yesterday, two companies operating in Russia raised over US$120 million
Integra oilfield services provider has informed of an additional issue of its shares amounting to 21% of its share capital and totaling 38 million Global Depositary Receipts of US$2.5 each (20 GDRs equaling one share). According to a source close to the company, the placement amount was US$95 million, the bid book was closed on Monday, and the demand exceeded offer 1.9 times. The deal shall be fully accomplished and the new stocks shall be listed at the LSE on September 25.

The placement price turned out to be 6.7% below the GDRs price upon trade closure on Monday (while yesterday the securities went up to reach US$2.85). During Integra’s 2007 IPO investors valued the company almost 7 times higher at US$16.75 per GDR.

About 70% of the funds raised by Integra will be directed toward reducing its outstanding debt which as of June 30, 2009 stood at US$368.5 million, including short-term debt of US$173.9 million. Integra intended to partially prepay EBRD US$250 million loan as well as to fund certain capital expenditures and corporate needs.

Integra representative declined to name the purchasers of the shares, but a source close to one of the placement bookrunners (ABN Amro, Alfa Capital Holdings and Morgan Stanley) said they included many investment funds from Scandinavia. According to Bloomberg, as of June and July Integra’s major investors were DWS Investments (4.24%), Fidelity (3.4%) and Prudential Financial (2.98%) funds and Capital Group (2%) whose representatives have not responded to the queries of Vedomosti.

According to a source, Integra’s President Felix Lubashevsky (holder of 13% of company shares) and Board of Directors Chairman John Fitzgibbons (holder of 6.9% shares) did not take part in the placement. Integra representative declined to comment on that information, but in case it was true, their respective shares decreased to 10.3% and 5.5%.
Yesterday, Ireland’s Petroneft Resources with assets in Russia sold to international investors 120.6 million of its shares (34.5% of the aggregate share capital) having raised US$27.5 million, said a representative of Renaissance Capital which was a placement bookrunner. In the opinion of Sergei Suverov, Vice-President at Sales Department of Deutsche Bank, issuers throughout the world took advantage of the growing markets and cheap resources to offer new placements for the purposes of debt repayments and low cost assets acquisitions.

Spanish Banco Santander plans to raise 5 billion euro through an IPO of its Santander Brazil subsidiary. Once the IPO is completed, capitalization of Santander Brazil should reach between 31 and 35 billion euro, somewhat a third of the capitalization of Banco Santander itself, and a figure comparable to the capitalization of Deutsche Bank (32.4 billion euro) and Societe Generale (31.9 billion euro).

Mr Suverov warned that a growing number of IPOs may have a negative impact on shares liquidity and pricing. He believes that window of opportunities for new placements will be in place as long as the central banks pursue their policy of injecting cash into financial sector.

Securities Association of China has been trying to prevent an overheating in the market by declining for four months to grant to financial corporations new licenses for participating in IPOs.