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Siberian gem giant Alrosa predicted to raise up to $1.8 billion in 16% stock float

By The Siberian Times reporter

04 October 2013

The world's top diamond producer is on course for a $10 billion valuation, say analysts.

'The asset is unique - at the moment Alrosa has no direct peers among public companies', Barclays Capital analyst Sergievsky said. Picture: Alrosa

Interest in the stock has been expressed already by major international players including a fund linked to the of the Anglo-American diamonds miner and trader De Beers and top Chinese investors, say media reports. Alrosa, based in Sakha Republic, also known as Yakutia, in eastern Siberia, accounts for around a quarter of global diamond production, and has reserves of almost 1.30 billion carats.

Alrosa chief executive Fyodor Andreyev said the share issue 'will expand our access to the international capital markets and help to unlock the value of the company'. It is seen as a key step in ambitious plans to grow and develop this iconic Siberian name.

Sources put the price of the stake in the range $1.4 to $1.8 billion. The stake comprises 14% from federal and regional government holdings and 2% from an Alrosa subsidiary, Wargan Holdings Limited.

Alrosa is listed on the Moscow stock exchange.

'The asset is unique - at the moment Alrosa has no direct peers among public companies,' Barclays Capital analyst Vladimir Sergievsky told Reuters.

'Investors who buy Alrosa shares will get exposure to the consumer sector, which is unusual for mining companies. Demand should be good.'

The world's top diamond producer Alrosa is on course for a $10 billion valuation

'Investors who buy Alrosa shares will get exposure to the consumer sector, which is unusual for mining companies. Demand should be good'. Picture: Alrosa

A road show for the offering is expected to begin on 14 October with the deal due to close by the end of the month, it was reported. After it goes through, the company will be owned 43.9% by the Russian federal government and 25% at regional level.

The sale was hailed as 'a landmark step in the implementation of the government's policy of reducing the state's role in the economy,' said Olga Dergunova, head of the Federal Agency for State Property Management. The company is also keen to find the resources necessary to launch new mining projects that would make up for its slowly-depleting Soviet-era base.

'The net proceeds of the offering to be received by Alrosa from the shares sold by Wargan Holdings Limited will be used to repay existing debt,' said a spokesman for the diamond company.