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Investment to stem from biotech float
Investors will be looking for healthy returns when 25 per cent of Russia's Human Stem-Cell Institute (ISKCh) goes up for grabs in the country's first post-crisis IPO.
The medicine producer is hoping to take advantage of signs of recovery in the sickly economy as it seeks to raise 150 million roubles when it floats on the MICEX in November.
"Since March all the markets have been showing positive dynamics," the company's head Artur Isayev said by telephone. "Life continues and it is necessary to use tools like an IPO to attract investors."
The firm wants to give itself a new lease of life by expanding into Belarus and Kazakhstan as well as funding an explosion of investment on new laboratory equipment in the coming years.
"In 2011-12 we will create new laboratories for developing projects," said Isayev at a press conference on August 25. "This part of the investment will come from our own income."
While the IPO of a biotechnology company may seem unusual, Alor Invest, the company who is organising the offering, said buyers would be impressed when the company's profits go under the microscope.
"The company has a reliable and improving stem cells custody business earning constantly growing inflows," said Dryomin adding that the market could grow 40-50 per cent.
ISKCh is not the first stem cell company to take the plunge on the stock exchange. Back in 2005 ViaCell, a US company which develops therapies from umbilical cord stem cells, was given a lifeline when it sold 7.5 million shares at $7 each.
With diversification becoming a priority for the Russian government following the oil price crash of last year, the men in white coats are unlikely to be coming for people investing in medical research companies.
It "is attractive for investors because of the possibility of barnstorming capitalisation growth after the commercial launch of gene therapy medicines, which have high potential on both Russian and international markets," said Dryomin.
ISKCh is revelling in the publicity generated from being the first post-crisis IPO, with many others delaying theirs until the crisis has passed.
"As we are holding the only IPO at the moment we have access to a lot of investors," said Isayev. "But the risk is that our activity now is more transparent and we are compelled to open the action before competitors."
Russian Railways' planned placement has run out of steam - at least until 2011 - while steel and iron ore firm Metalloinvest has thrown its plans on the scrap heap.
Russia faces a battle with the US and Germany to be top dog in the sector, particularly after President Obama ended the ban on state funding for human stem cell research.