Russian retailer backed by Brooklyn Nets billionaire weighs IP0

epa05097393 Russian billionaire Mikhail Prokhorov,  owner of the NBA team Brooklyn Nets, speaks to media during a press conference in New York, USA, 11 January 2016. In desperate need of a change, the underachieving Brooklyn Nets fired coach Lionel Hollins on 10 January and re-assigned Billy King within the organization after five years as general manager.  EPA/ANDREW GOMBERT

Bloomberg

Obuv Rossii, a Russian shoe retailer backed by billionaire Brooklyn Nets owner Mikhail Prokhorov, is seeking to raise as much as $120 million in an initial public offering, according to a person familiar with the matter.
The company may offer a stake of as much as 40 percent on the Moscow Exchange in October and use the proceeds to double its store network over the next three to five years, said the person, who declined to be identified because the information is private. Prokhorov, who owns a quarter of Obuv Rossii, won’t be selling his stake, the person said. The offering may be the first major IPO by a Russian company since billionaire Vladimir Evtushenkov’s children’s-goods retailer Detsky Mir PJSC sold shares in February. Footwear is a resilient market that posted sales growth in ruble terms amid Russia’s recent recession, according to Discovery Research Group.
Obuv Rossii is unusual because it makes 60 percent of its sales through installment plans, giving consumers as long as 10 months to pay for their shoes. An arrangement typical for expensive items like household appliances and fur coats turned out to be popular for $150 leather boots, too.
“When a decade ago I heard at an industry conference that handset retailers are selling phones on credit to boost sales, I thought, why not do it with shoes?” Obuv Rossii founder and Chief Executive Officer Anton Titov said in an interview in which he declined to comment on any IPO plans. “At first, banks treated us as if we were maniacs, saying this won’t work with shoes. But it did.”
Prokhorov, who built his $11 billion fortune initially through metals and now owns interests from banking to energy to sports, bought his stake in Obuv Rossii in December through his family office. His Renaissance Capital is among the investment banks managing the shoe chain’s IPO.
A spokesman for Prokhorov’s investment vehicle Onexim Group said Obuv Rossii was a private investment for the billionaire and declined to comment further.
When he decided to offer installments, Titov first started joint projects with lenders, enabling the company to offer customers interest-free loans. After banks tightened scoring procedures and cut down on lending after the 2008 financial crisis, Obuv Rossii started providing installments to consumers itself.
“About 80 percent of our customers are women inclined to impulse purchases—they come to a store to buy shoes, and then they see a nice bag and want a belt also,” Titov said. “That’s where our installments programme steps in.”
Rossii’s customers can generally afford buying its midprice shoes without credit, according to Titov. “So, our installments are rather a matter of marketing and winning consumer loyalty,” he said.

epa06135399 Women work at the Ralf Ringer shoe factory in Moscow, Russia, 10 August 2017. Ralf Ringer company appeared in the Russian market in September, 1996 and manufactured shoes for men only. Since 2010 the company added a female collection of footwear to its product range. Having started in 1996 with volume of 30,000 pairs of shoes, the company had an output of 1,8 million pairs of shoes in 2016. The company has three factories and employs mostly women.  EPA/YURI KOCHETKOV

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