Detsky Mir Cuts Stakes in Russia’s First Pandemic Share Sale

Russian conglomerate Sistema and the Russia-China Investment Fund (RCIF) have cut their stakes in children’s goods retailer Detsky Mir in Moscow’s first share offering since the coronavirus pandemic struck, Reuters reported.

Sistema and RCIF said they had raised about 11 billion roubles ($158 million) by selling 117.8 million shares, or 15.94% of Detsky Mir, at 93 roubles per share, reducing their stakes in the retailer to 20.38% and 4.62% respectively.

Share offerings globally have been few and far between since the pandemic hit earlier this year though investors are now cautiously returning to markets after ditching assets in previous months.

The Russia-China Investment Fund (RCIF) is a joint venture between the Russian Direct Investment Fund (RDIF) and China Investment Corporation.

RDIF Chief Executive Kirill Dmitriev said in a statement that demand exceeded the offering fivefold, with over 60% of the shares subscribed by top investment funds from Europe, America and Asia. He did not name the funds.

“RDIF jointly with Sistema has opened the Russian market to foreign investors after the coronavirus epidemic. The placement of Detsky Mir shares was the first successful placement of Russian equities in 2020,” Dmitriev said.

Detsky Mir shares were trading at about 99 roubles on Wednesday, up by more than 2% while Sistema was up 3.6% at 17.6 roubles. The share offering increased the free float in Detsky Mir to 75%.

Many Russian companies that were initially targeting initial public offerings this year have pushed back their plans as the market was in turmoil due to coronavirus, according to their executives and bankers.

Credit Suisse, Goldman Sachs, Sberbank CIB, VTB Capital, and Alfa-Bank arranged the Detsky Mir deal.

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