Convenience store chain Mercury Retail Group said on Tuesday it had postponed its initial public offering due to current market conditions, becoming the second Russian firm this month to put listing plans on ice after car-sharing company Delimobil last week.
Mercury Retail, which runs two nationwide chains of alcohol and convenience stores, had been aiming to raise $1.2 billion-1.3 billion in a Moscow debut, targeting a market capitalisation of $12 billion-$13 billion, which would have been the largest for a Russian listing since Western sanctions were imposed against Moscow over the annexation of Crimea in 2014.
The company gave no further explanation for the postponement, but three sources in financial circles said the company's valuation had been too high.
"For $10 billion they would have sold out for sure. Everyone liked the good volume and the company, the sector... They just needed to come with the right valuation," one of the sources said.
More Russians have been shopping at convenience and discount stores as low incomes and rising inflation stifle purchasing power, and that has helped Mercury Retail outperform the biggest companies in the market, analysts have said.
But the potential market capitalisation would have been higher than that of retail market leader X5, despite Mercury Retail's far lower market share.
Low-cost retailer Fix Price raised around $2 billion in a London listing in March, but its shares have fallen more than 13% since then, while stocks globally have soared.
Russia's benchmark MOEX index has climbed almost 25% in that time.
"The market has shown that despite demand for placements, investors remain picky and understand that not every beautifully presented company will grow," another of the three sources said.
Investor Appetite In Europe
Investor appetite for new stock listings in Europe has soured in recent months due to inflation fears and concerns over the impact on global markets of debt problems at Chinese property developers, slowing what has been a record year for European IPOs.
Many recently listed companies are trading in the red, with the FTSE Renaissance IPO index for the Europe, Middle East and Africa region down 9.3% this year.
Russia's Delimobil postponed its US IPO last week, but real estate database Cian did manage to raise $290 million on the New York Stock Exchange last Friday.
Russia's second-largest bourse, SPB Exchange, launched its IPO on Tuesday, setting the price range at $10.50-11.50 per share, implying an equity value of the company of up to $1.3 billion.