MOSCOW - Russian Helicopters will become the first Russian government-controlled industrial holding producing military hardware to go public, aiming to raise $500 million in an initial public offering on London and Moscow exchanges.
"The offering is expected to consist of the sale of the existing shares primarily by the company's major shareholder, Oboronprom, as well as up to $250 million of primary shares in the form of Global Depositary Receipts," the company said in a statement April 12.
One GDR represents one ordinary share.
"The company currently plans to use net proceeds ... to pay off existing debts and to fund certain mandatory tender offers for shares in its subsidiaries," the company said.
Russian Helicopters, which claims to be the No. 1 global producer of attack helicopters and the world's leader in producing medium and heavy-lift rotorcraft, was created by the government in 2007 to bring the country's helicopter-makers into a single vertically integrated holding.
It is 100 percent controlled by Oboronprom, another government-controlled holding, that controls the country's engine-makers.
The company holds majority stakes in every Russian major helicopter-maker, including Mil (72.38 percent), Kamov (99.79 percent), Ulan-Ude Aviation Plant (75.09 percent), Kazan Helicopter Plant (65.9 percent) and several others.
The consolidation of the helicopter-makers was completed in December, when Russian Helicopters announced that it had boosted its share in the Rostvertol, Rostov-on-Don-based plant, from 22.76 percent to 75.06 percent.
Russian Helicopters plans to announce the placement price on May 11, and the main trading session will start May 16.
Bank of America Merrill Lynch, BNP Paribas and VTB Capital, an investment arm of the Russian government-controlled VTB bank, have been appointed as joint global coordinator and book runners.
VTB Capital has valued Russian Helicopters at $2.5 billion to $3 billion ahead of the initial public offering in Moscow and London, Russian official news agency RIA Novosti reported April 14. BoA Merrill Lynch has reported the company value is $2.2 billion to $3.2 billion.
Officials at Oboronprom and Russian Helicopters declined to comment on the initial public offering on the record, citing its sensitivity.
"We are already the undisputed leader in some of the most attractive and fastest growing markets in the global helicopter industry. Our IPO comes at a time when we enter into a new cycle of long-term growth, with strong demand and firm orders from our existing customers, and increasing opportunities to win new customers in new markets around the world," Dmitry Petrov, CEO of the Russian Helicopters, said in an April statement.
"Last year, we even created a special department to trade in helicopters," said Vyacheslav Davidenko, spokesman for Rosoboronexport, the official arms exports agency. "The global demand for the Russian helicopters is growing."
Latin America, India and Southeast Asia remain the biggest buyers of Russian helicopters, Davidenko said.
In 2009, 30 percent of the 183 helicopters rolled out by the company were sold to foreign militaries, half of the total was domestic and foreign commercial civilian orders, and the remaining 20 percent was procured by government agencies, including the Defense Ministry.
The company was 69 in the Defense News Top 100 ranking in 2009, with the total revenue of $1.82 billion, revenue from defense of $813.8 million, and profit of $173 million.
In 2010, the holding produced 214 helicopters, Russian Helicopters said.
The company has not yet disclosed its 2010 financial results, but its website said that the company accounted for about 85 percent of helicopter sales in Russia and the former Soviet Union, and 13.5 percent of worldwide helicopter sales in U.S. dollar terms.
Yuri Slusar, head of the aviation industry department at the Russian Industry and Trade Ministry, said April 27 that output of the Russian helicopter-making industry grew by 2.5 times between 2003 and 2007, while revenues grew 2.1 times between 2006 and 2010.
"This is the leading sector, they are profitable, having total revenue of some $2.5 billion, they have a profit margin of 10-12 percent," he told journalists in Moscow.
He added that in the past decade, Russia was the world's third biggest producer of the military helicopters, while it ranked seventh in the 1990s.
Under the 2011-20 state arms procurement program, the Defense Ministry and the security agencies plan to buy 1,000 helicopters of different models and types.
Deputy Defense Minister Vladimir Popovkin told journalists that $29 billion will be spent on helicopters under the program through 2020. More than 100 choppers are to be delivered to the Russian military in 2011, he added.
In an April 15 statement, company officials said that it had signed a dealership treaty with the Brazilian Qualy Group Brasil for delivery of 150 light Mi-34S1 helos.
According to an industry source, Russian Helicopters is now loaded with orders for 2011, 2012 and most of 2013
"Russia's recovering economy props the demand for helicopters by the big Russian companies, like Gazprom, that operate in remote and hardly accessible areas," said Roman Kirillov, the spokesman for the Russian Helicopters, said.
According to a company statement, its order portfolio by the end of 2010 counted 351 choppers, 20 percent of them being commercial and the rest being military; 204 helicopters have been ordered to be delivered in 2011.
Konstantin Makiyenko, a researcher with the Center for Analysis of Strategies and Technologies, a think tank here, said the outstanding design of the flagship among the Russian Helicopters, Mi-17 and its modifications, are the key driver behind the development of the Russian helicopter industry.
DN Top 100 rank: 69.
2009 revenue: $1.8 billion total; $813.8 million from defense.
General director: Dmitry Petrov.
Employees: 38,177 as of 2009.
Average salary: $700 per month.
"The offering is expected to consist of the sale of the existing shares primarily by the company's major shareholder, Oboronprom, as well as up to $250 million of primary shares in the form of Global Depositary Receipts," the company said in a statement April 12.
One GDR represents one ordinary share.
"The company currently plans to use net proceeds ... to pay off existing debts and to fund certain mandatory tender offers for shares in its subsidiaries," the company said.
Russian Helicopters, which claims to be the No. 1 global producer of attack helicopters and the world's leader in producing medium and heavy-lift rotorcraft, was created by the government in 2007 to bring the country's helicopter-makers into a single vertically integrated holding.
It is 100 percent controlled by Oboronprom, another government-controlled holding, that controls the country's engine-makers.
The company holds majority stakes in every Russian major helicopter-maker, including Mil (72.38 percent), Kamov (99.79 percent), Ulan-Ude Aviation Plant (75.09 percent), Kazan Helicopter Plant (65.9 percent) and several others.
The consolidation of the helicopter-makers was completed in December, when Russian Helicopters announced that it had boosted its share in the Rostvertol, Rostov-on-Don-based plant, from 22.76 percent to 75.06 percent.
Russian Helicopters plans to announce the placement price on May 11, and the main trading session will start May 16.
Bank of America Merrill Lynch, BNP Paribas and VTB Capital, an investment arm of the Russian government-controlled VTB bank, have been appointed as joint global coordinator and book runners.
VTB Capital has valued Russian Helicopters at $2.5 billion to $3 billion ahead of the initial public offering in Moscow and London, Russian official news agency RIA Novosti reported April 14. BoA Merrill Lynch has reported the company value is $2.2 billion to $3.2 billion.
Officials at Oboronprom and Russian Helicopters declined to comment on the initial public offering on the record, citing its sensitivity.
"We are already the undisputed leader in some of the most attractive and fastest growing markets in the global helicopter industry. Our IPO comes at a time when we enter into a new cycle of long-term growth, with strong demand and firm orders from our existing customers, and increasing opportunities to win new customers in new markets around the world," Dmitry Petrov, CEO of the Russian Helicopters, said in an April statement.
Market Potential
Helicopter-making is the booming industry in Russia, with strong export prospects and promising domestic orders, both state and commercial ones."Last year, we even created a special department to trade in helicopters," said Vyacheslav Davidenko, spokesman for Rosoboronexport, the official arms exports agency. "The global demand for the Russian helicopters is growing."
Latin America, India and Southeast Asia remain the biggest buyers of Russian helicopters, Davidenko said.
In 2009, 30 percent of the 183 helicopters rolled out by the company were sold to foreign militaries, half of the total was domestic and foreign commercial civilian orders, and the remaining 20 percent was procured by government agencies, including the Defense Ministry.
The company was 69 in the Defense News Top 100 ranking in 2009, with the total revenue of $1.82 billion, revenue from defense of $813.8 million, and profit of $173 million.
In 2010, the holding produced 214 helicopters, Russian Helicopters said.
The company has not yet disclosed its 2010 financial results, but its website said that the company accounted for about 85 percent of helicopter sales in Russia and the former Soviet Union, and 13.5 percent of worldwide helicopter sales in U.S. dollar terms.
Yuri Slusar, head of the aviation industry department at the Russian Industry and Trade Ministry, said April 27 that output of the Russian helicopter-making industry grew by 2.5 times between 2003 and 2007, while revenues grew 2.1 times between 2006 and 2010.
"This is the leading sector, they are profitable, having total revenue of some $2.5 billion, they have a profit margin of 10-12 percent," he told journalists in Moscow.
He added that in the past decade, Russia was the world's third biggest producer of the military helicopters, while it ranked seventh in the 1990s.
Under the 2011-20 state arms procurement program, the Defense Ministry and the security agencies plan to buy 1,000 helicopters of different models and types.
Deputy Defense Minister Vladimir Popovkin told journalists that $29 billion will be spent on helicopters under the program through 2020. More than 100 choppers are to be delivered to the Russian military in 2011, he added.
In an April 15 statement, company officials said that it had signed a dealership treaty with the Brazilian Qualy Group Brasil for delivery of 150 light Mi-34S1 helos.
According to an industry source, Russian Helicopters is now loaded with orders for 2011, 2012 and most of 2013
"Russia's recovering economy props the demand for helicopters by the big Russian companies, like Gazprom, that operate in remote and hardly accessible areas," said Roman Kirillov, the spokesman for the Russian Helicopters, said.
According to a company statement, its order portfolio by the end of 2010 counted 351 choppers, 20 percent of them being commercial and the rest being military; 204 helicopters have been ordered to be delivered in 2011.
Konstantin Makiyenko, a researcher with the Center for Analysis of Strategies and Technologies, a think tank here, said the outstanding design of the flagship among the Russian Helicopters, Mi-17 and its modifications, are the key driver behind the development of the Russian helicopter industry.
RUSSIAN HELICOPTERS
Founded: 2007.DN Top 100 rank: 69.
2009 revenue: $1.8 billion total; $813.8 million from defense.
General director: Dmitry Petrov.
Employees: 38,177 as of 2009.
Average salary: $700 per month.
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