Owner of Russian wine retailer Red & White to top IPO boom

Owner of Russian wine retailer Red & White to top IPO boom
By bne IntelliNews October 27, 2021

Mercury Retail Group, which controls the Red & White Russian wine retailer and distributor, has announced its preparations for an initial public offering (IPO) of global depositary receipts (GDRs) and to list on the Moscow Exchange, in line with previous reports that it is performing due diligence on the chain with over 8,800 outlets.

Mercury is the owner of both Red & White and the Bristol food chain, and is focusing on its ultra-convenience store format as it continues expansion of what is already Russia's third-largest store network by sales. Under the two banners Mercury Retail operates more than 14,000 stores in 68 of Russia’s 85 regions. 

Igor Kesaev, Sergei Katsiev and Sergei Studennikov plan to IPO up to 15% of Mercury, with a possible follow-up secondary offering (SPO) raising the free float to 25-30%, as reported previously. 

Reportedly, the valuation of the two chains could amount to $20bn-25bn, according to the market sources of Kommersant daily, which would result in an IPO of 10-15% of the company's shares worth up to $2bn, the largest in the ongoing Russian IPO boom.

Analysts surveyed by Kommersant previously said they believed that an IPO of merged Bristol and Red & White would be more attractive, but noted the governance complications that could arise from such a merger. 

Previously Dixy, Bristol and Red & White merged their assets in 2019 to create Russia's third-largest retailer. As reported by bne IntelliNews, the owners of Red & White have just sold Dixy to market-leading Magnit, as the Russian retail segment is seen growing mostly through consolidation.

Mercury could also see a powerful catalyst for growth should Russia allow online sales of alcohol, which has been discussed by watchdogs since 2020.

This year Russian variety discounter Fix Price went public on March 5 at a price of $9.75 per GDR, implying a market capitalisation of $8.3bn, with the shareholders raising $1.7bn and bringing the free float to 21.3%.

Mercury Retail financial highlights

RUB million (unless otherwise stated)

1H 2021

1H 2020

FY 2020

LTM June 2021

Revenue

328,708

259,790

577,235

646,153

Gross profit

79,842

58,412

131,612

153,041

  Gross margin, %

24.3

22.5

22.8

23.7

Adj. EBITDA

35,944

23,549

55,914

68,309

  Adj. EBITDA margin, %

10.9

9.1

9.7

10.6

IAS 17-based adj. EBITDA

28,087

16,358

41,303

53,019

  IAS 17-based adj. EBITDA margin, %

8.5

6.3

7.2

8.2

Net income

19,009

9,027

25,653

35,635

  Net income margin, %

5.8

3.5

4.4

5.5

 

Mercury Retail operational highlights

 

Q2 2021

Q1 2021

Q4 2020

Q3 2020

Q2 2020

Q1 2020

Number of stores, e-o-p

13,498

13,054

12,728

12,316

12,007

11,830

Total selling space, sq. m., e-o-p

1,006,651

972,811

948,280

916,886

893,938

880,404

Like-for-like sales growth, %

14.8

22.3

23.0

24.0

19.3

10.1

 

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