OREANDA-NEWS. April 22, 2011. Syktyvkar Tissue Group, JSC (STG) seeks to raise up to 700 million RUB during IPO organized by VELES Capital IC and ALOR INVEST. IPO is scheduled for April - May 2011 on MICEX.

Syktyvkar Tissue Group is one of the biggest Russian pulp and paper mill, specializing on the production of market base paper, toilet paper, paper towels and napkins. Company’s market share of toilet paper production was 8% in 2010 and of the market base paper was 26% in the same period. Paper napkins and towels factory was run in 2008, company had 2% market share (in unit terms) in 2010.

The investment program is estimated in €60 mln till 2015, cash from IPO will be a part of this program. Other part of investments will be financed by own and borrowed sources. It is planned to modernize the existing equipment, to increase capacities in Syktyvkar and create a new production line in the Central Federal District. As a result in forecast revenue will be increased from approximately 1.7 billion RUB in 2010 to 4.5 billion RUB in 2015, net income also will be risen from 94 million RUB to more than 500 million RUB rubles accordingly.

"STG is the largest producer of market base paper which is used in the production of toilet paper, paper towels and handkerchiefs, - said Mark Reznik, CEO STG. – Expecting significant consumption growth of sanitary-hygienic products, we are going to be ready for changes that will be in the next five years. The proposed investment program will allow us not only to save but also to increase the share of STG on the market tissue in Russia".

Mikhail Zak, managing director of Veles Capital Investment Group added that all the necessary procedures for IPO will be completed soon: "This will be the first public placement of shares of the Russian companies of the industry. Clear and transparent STG’s business gives reasons for expectation for a successful placement among institutional and private investors".

According to Maxim Dremin, ALOR INVEST deputy CEO, Russia lags in the consumption of tissue versus developed countries and the countries of Eastern Europe: "It is obvious that in the upcoming years this gap will be reduced, which implies a significant growth of consumption of sanitary-hygienic products. STG should become a beneficiary of this growth".

Syktyvkar Tissue Group was founded in 1972, when on base of Syktyvkar timber industry complex, which was the largest plant in the industry at that time, established the production of consumer goods. The most famous brands of high-quality line are hygienic products "Veiro" and "56" which is still best-selling brand. The plant is equipped with modern facilities of leading world manufacturers, such as: Metso Paper, Fabio Perini, SDF. The total area of the premises is 35 thousand sq. m, and there are 400 employees in STG. Company produces over 50 thousand tons of base paper, 275 mln standard rolls and 14 mln of conditional packs per year.

VELES Capital IC, LLC have been operating in Russian fond market since 1995 and it is one of the five largest investment companies in Russia by total turnover of securities (5.6 trillion RUB in 2010, according to National Rating Agency and RBC ratings). Veles Capital is a group of companies, which provides services to private and corporate investors in the stock and corporate finance market, collective investments and development areas. Veles Capital has the experience and capability to carry out projects of any complexity in the field of mergers and acquisitions, LBO and MBO transactions, direct investments, fund raising, IPO. The company successfully implemented dozens of projects in the market of corporate finance and strategic investments in Russia and Ukraine. Veles Capital is one of the few Russian investment companies with the reliability rating of the international rating agency S&P (rating was first assigned in 2006 and reaffirmed every year, the level is B-/S/ruBBB, stable outlook). Company has also a National Rating Agency Rating at the level of AA+ (very high reliability, the first level, positive outlook, confirmed in 2011).

ALOR INVEST, JSC have been operating on the Russian stock market since 1993 and specializing in a range of financial services to corporate clients. Company provides brokerage services in all exchanges with the personalized service and advanced tools, including the commodity market, organizing bond. Company organizes placement of stocks of public corporations on market inclusion of shares in the quotation lists. Also ALOR INVEST The company has National Ratinf Agency individual reliability rating at AA + (very high reliability, the first level). In 2009, ALOR INVEST organized the initial public offering of shares of Human Stem Cell Institute, which became the first IPO in Russia after the crisis and the first IPO in the sector of innovation and growth companies on MICEX. ALOR INVEST acted as IPO of Farmsintez, JSC organizer - the largest IPO at the MICEX in 2010.