Diamond billionaire Lev Leviev's Russian real estate unit is seeking as much as $1.4 billion in a public share sale that could be the ninth in seven months to tap investor demand for Moscow property stocks.
Lev Leviev
Photo: Courtesy
Investors are being offered 100 million global depositary receipts at between $10 and $13 each in an initial public offering, AFI Development Plc said Tuesday. The stock will be listed in London and AFI may sell a further 10 million shares.
AFI Development has assets of $3.7b. in Russia in 12 cities. When completed, the projects will have combined lettable space of more than 3.2 million sq.m. It's negotiating an additional 12 projects with 1.5 million sq.m. of space.
The company will have a market value of as much as $5.5b. before the IPO if it sells the shares at the top of the range, it said. That would make the company worth as much as $6.9b. after the IPO.
Africa Israel Investments Ltd., which is controlled by Leviev, owns 88 percent of AFI Development, with the remainder owned by Nirro Group SA, which is controlled by Alexander Khaldey, chief executive of AFI Development's Russian operating unit. Neither is selling shares in the IPO.
Nineteen percent of AFI Development's shares will be freely traded after the IPO, before the exercise of the so-called over-allotment option. The share sale is being managed by Deutsche Bank AG and Morgan Stanley, together with Goldman Sachs Group Inc. and Citigroup Inc.
Saar Golan, an analyst at Clal Finance Batucha Investment Management Ltd. on Tuesday cut his recommendation on Africa Israel Investments to "market perform" from "outperform" and raised his price target to NIS 480 from NIS 450. AFI accounted for 60% of the value of Africa Israel, he said in a note to clients.
"We can't ignore the political and business environment in Russia which continues to be unstable," Golan said. "Buying Africa Israel at current levels brings with it an unwarranted risk. Those who want exposure to Russia will switch into AFI Development directly."
