Retail

Russian Toy Store IPO Could See $355M

In Russian, Detsky Mir (Дéтский мир) means “Child’s World.” It’s also the name of the Russian toy retailer eyeing the first IPO by a Russian consumer retailer in nearly three years.

Russian consumer spending has dropped considerably in the past few years as the country has struggled with a recession, said Bloomberg. But Detsky Mir has reportedly opened over 200 stores in the past two years and plans to roll out another 250 over the next three. Revenue for the toy retailer has risen by nearly 30 percent annually, and online sales are on the upswing as well.

Founded in 1957, Detsky Mir’s current IPO is expected to raise about $355 million, with pricing on Wednesday valuing the company at almost $1.1 billion, Bloomberg said. Analysts and investors see Detsky Mir’s IPO as a litmus test for future Russian investments.

Priced on the low end at 85 rubles a share, the sale is appealing largely to foreign investors, with Bloomberg reporting some 90 percent of bids for Detsky Mir coming from outside Russia. Some 35 percent of the total came from the U.K., while about 25 percent came from sources in the U.S., said Sberbank CIB.

Natasha Zagvozdina, head of research at Verno Capital in Moscow, was quoted as saying, “With investor sentiment improving, other Russian companies may also consider selling shares.”

Morgan Stanley analysts are reportedly largely bullish on Detsky Mir’s offering, though one worry is that big-box stores could begin to eat away from the company’s profits just as Walmart and Target did to Toys“R”Us stateside.

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