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Russia's Cian to use funds from IPO for M&A, loan repayment - CEO

por Johnnie Duckworth (2021-11-27)

By Gleb Stolyarov

MOSCOW, Nov 5 (Reuters) - Russian real estate database Cian, which raised more than $290 million in an initial public offering on Friday, is considering using the funds for mergers and acquisitions or to repay a loan, its chief executive told Reuters.

Cian's American Depositary Shares (ADS) began trading on the New York Stock Exchange on Friday and are set to start trading on the Moscow Exchange imminently.
The listing price suggested a company valuation of $1.1 billion.

Of the money raised via the IPO, around $228 million went to selling shareholders, leaving $65 million on hand for the company.

"We think these funds can be used for M&A," CEO Maxim Melnikov said.

"We are not saying there is a specific deal. It is one of the ways to invest the funds."

In February, the company purchased the N1 Group, a real estate platform in major Russian cities such as Yekaterinburg, Buy Paypal VCC Novosibirsk and Omsk.

Melnikov said the funds would also be used to repay a small outstanding loan. At June 30, Cian had a loan balance of 542 million roubles ($7.62 million) under a credit facility agreement with Raiffeisenbank and Rosbank.

The company currently holds 810 million roubles in cash and cash equivalents, according to its IPO prospectus.

Cian, which has not paid or declared cash dividends on its ordinary shares in recent years, said it planned to keep its liquidity and future earnings to fund and grow its business in the medium term.

It said any decision to declare cash dividends in the future would be up to its board of directors and depend on several factors, including its strategy.

In the first half of 2021, Cian's revenue increased by 65% to 2.7 billion roubles although it incurred losses of 1.67 billion roubles.

The company offered 18,213,400 American Depositary Shares (ADS) priced at $16.00 per ADS, the upper limit of its indicative range.

The ADS opened 8.7% above the IPO price in their debut on the New York Stock Exchange.

A financial market source told Reuters that Cian shares had been oversubscribed 10 times by investors.

($1 = 71.1720 roubles) (Reporting by Gleb Stolyarov and Olga Popova; Writing by Gabrielle Tétrault-Farber; Editing by Kirsten Donovan)