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Retail

Lenta Set for 2015's Steepest London Drop as EBRD Trims Stake

Lenta headed for its biggest retreat this year in London after one of the Russian hypermarket chain’s largest shareholders trimmed its holding at a discount as part of an accelerated private placement.

The shares decreased 8.8 per cent to $7.75 as of 2:39 p.m. in London today, poised for the biggest drop since 16 December and paring this year’s surge to 15 per cent. Lenta decreased for the fifth day in Moscow, losing 7.4 per cent.

The European Bank for Reconstruction and Development sold 17.8 million of the company’s global-depositary receipts at $7.85 a share, according to a statement, representing a 7.6 per cent discount to their closing price on Tuesday. As a result, the bank’s stake in Lenta has dropped to 11.5 per cent from 15.3 per cent, data compiled by Bloomberg show. The sale was part of EBRD’s “normal portfolio management operations,” the bank said on Wednesday.

“Investors always view share sales by major shareholders with a discount to the market as negative,” Vitaly Isakov, a money manager at Otkritie Asset Management in Moscow, said by e- mail. “We don’t know yet why EBRD reduced its stake, but it’s possible that it has a negative outlook for the company’s future.”

Russian consumer demand - the nation’s engine of growth for more than a decade -- has sputtered as inflation nears the fastest pace in 13 years after the ruble’s decline in 2014. A collapse in retail sales continued in May with a 9.2 per cent plunge from a year earlier.

Lenta raised $225 million in March, selling additional stock for expansion at $6.4 apiece. The company boosted its first-quarter sales by 38 percent to 54.5 billion rubles ($1 billion) as same-store sales surged 15 percent, according to an April 23 statement.

News by Bloomberg, edited by ESM

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