Russia's Top Companies Plan To Tap Capital Markets For Funds

Aeroflot to open secondary share offering to private investors; Shipping firm Sovcomflot targets $500 million in Moscow IPO

Aeroflot and Sovcomflot, Russia’s major companies, propose to raise funds by using two different types of financial instruments.

Russia’s top carrier Aeroflot plans to open up its upcoming secondary share offering (SPO), part of state support for the country’s biggest airline, to private investors, sources close to the deal said.

Top Russian shipping company, Sovcomflot (SCF), seeks to raise at least $500 million in an initial public offering (IPO) on the Moscow Stock Exchange to spend on new projects and reducing debt.

Aeroflot slumped to a 36 billion rouble ($481 million) loss in the second quarter after flights nearly ground to a halt amid the coronavirus pandemic. The state has approved an issue of up to 1.7 billion new shares.

The new share issue would more than double Aeroflot’s total shares outstanding and would represent 60% of its enlarged capital if issued in full. The price is yet to be set by the company.

The state plans to buy part of the new share issue as it aims to retain no less than its existing 51.2% stake in Aeroflot, with Russian Direct Investment Fund (RDIF) and VTB also taking part, sources have told Reuters.

Aeroflot now wants to open up the deal to private investors, too, the sources said, as the state wants to raise as much cash for its top carrier as possible.