Russian dairy company set to milk offering

Russia's leading dairy products and fruit juices company is set to launch an initial public offering on the New York Stock Exchange in the next few weeks. Wimm Bill Dann, which sells J7 brand of juices, as well as milk, yoghurt and other products, is set to offer 25-30 per cent of its expanded share capital via a listing of American Depositary Receipts. The company, which is privately held by a small group of executives, is believed to be preparing to offer its shares in late January, with the deal being closed shortly afterwards. The launch follows the recent successful IPOs of MTS and Vimpelcom, the telecoms companies, but apart from oil and gas groups, few other Russian companies are listed on foreign stock exchanges. IBS, a computer services company, as well as Lukoil, the country's largest oil group, previously indicated plans to seek a listing in 2001, but have since postponed their issues, citing poor market conditions. Wimm Bill Dann potentially has considerable appeal because it allows investors to tap into Russia's consumer goods sector, which is developing fast after years of untapped demand during the era. The Russian economy is set to grow by 5 per cent or more in 2002, close to the level for 2001 and after growth of more than 8 per cent in 2000, on the back of high commodity prices and a recovery triggered partly by the devaluation of 1998. Ratings on the country's creditworthiness have been improving; there is a strong budget surplus and a positive trade balance; and Moscow is one of the world's best-performing stock markets of this year. Some research suggests that Wimm Bill Dann, which had sales of $480m in 2000, has a 30-40 per cent share of the domestic market in both dairy products and juices, well in excess of its competitors in a highly fragmented sector. It has begun modest exports to western Europe. However, some market observers warned that interest would be limited if the listing was for less than a quarter of the share capital, as that would restrict the capacity of institutional investors to acquire significant stakes and exert some influence over management. Wimm Bill Dann and its advisers declined to comment on the planned listing ahead of filings with the US Securities and Exchange Commission.