Russian consumer electronics and mobile phone retailer, Euroset, has decided to put off the IPO it had planned for the end of this week.
Euroset commenced collecting bids for company shares on April 1 setting a price range at $9.25-11.30 per GDR, potentially valuing Euroset from $2.7-3.3 billion. President Alexander Malis said in a company statement that the market conditions are not favorable enough for company placement. "Although investment community interest in Euroset has increased, we have decided not to conduct the IPO in difficult and volatile market conditions. The prognosis for Euroset's future looks good, and we continue to implement our strategy. Euroset will continue to develop its retail chain and will maintain our leadership position on the market. We will be keeping investors informed as to our development plans," Alexey Minaev, head of analytical department, Rye, Man & Gor Securities, believes the company could have attracted greater investor interest at a lower price.“The company was overvalued in my opinion with the main factor behind their evaluation the unusually promising financial figures that were reported in the 2010 FY report. Essentially, the company profit margin was two times higher than in the previous periods. Actually, the company’s EBITDA has shown a negative dynamic from 2007 till 2009. However, this figure is rather volatile and cannot be taken as major figure while estimating the company. Moreover, the company business profits are based on low margin commission earnings apart from electronic products sale. I think every company has a chance to sell its shares and attract investors but within a reasonable price range. Though, I don’t think Euroset shareholders will offer their shares with a significant discount yet they will explore other ways to improve the company image and get back to desired IPO in two or three months later.”