“Children’s World” played enough on the stock exchange – Business – Kommersant

Against the background of difficulties with business and difficulties for foreign investors, the largest Russian seller of children’s goods, Detsky Mir, is considering turning from a public company into a private company. The procedure involves a partial transfer of shareholders into the possession of a non-public structure and the redemption of securities. The news has already led to the collapse of Detsky Mir shares on the Moscow Exchange. Consumer savings and increased competition from online platforms could encourage the group to abandon the status of a public company, experts say.

Detsky Mir Group will consider the issue of a phased transformation into a private business, reported group on Monday. According to the statement, 60% of Detsky Mir’s shares are traded on the Moscow Exchange, a significant share of which is owned by foreign investment funds. And funds from unfriendly jurisdictions cannot make transactions on stock exchanges, a number of investors have difficulty voting at shareholder meetings, which can block the adoption of important decisions for Detsky Mir, and also creates the risk of blocking dividends.

Detsky Mir is the largest seller of children’s goods in Russia. For July 30, 2022 includes 1.1 thousand stores in Russia, Kazakhstan and Belarus. In the first half of 2022, the group’s net revenue increased by 8.3% to RUB 79.2 billion. The main shareholders are the structure of the ex-head of Polyus Pavel Grachev and Mikhail Stiskin and the company of the managing partner of the Altus Capital fund Dmitry Klenov.

The transformation involves the reorganization of Detsky Mir PJSC and the partial transfer of shareholders from a public company to Detsky Mir LLC, which will focus on the development of the retail network. Shareholders of the public company after the reorganization will be able to exchange their shares for securities of a subsidiary of PJSC Detsky Mir, which will own 100% of Detsky Mir LLC. The terms of the exchange will be determined by the group’s board of directors.

After the reorganization, the company’s subsidiary will offer all shareholders of PJSC Detsky Mir to sell the shares at a price based on the results of trading on the Moscow Exchange six months before the offer. The company will also apply to the government commission with a request to allow the payment of funds in rubles for the sold shares to non-resident investors from unfriendly countries, bypassing type “C” accounts intended for non-residents.

Shares of Detsky Mir reacted to the news with a sharp fall. By 14:20 Monday, the paper fell 9.6% to 65.5 rubles. per share, the capitalization of the group decreased to 48.13 billion rubles. According to Marat Ibragimov, a senior analyst at Gazprombank, Detsky Mir can buy shares at 72 rubles per share. for paper. This implies a premium to the current market price and a 55% discount to the share buyback price of RUB 160. in the course of an offer proposed by a new strategic investor in November 2020, he calculated.

As Detsky Mir noted, in the face of pressure on the Russian economy and declining incomes, the population is switching to a lean consumption model, which is especially reflected in specialized retail. According to Focus Technologies, the number of customers in children’s goods stores in September-October 2022 decreased by 25% year-on-year, while turnover and average check decreased by 14% and 13%, respectively. In addition, Detsky Mir points to significant changes in the business environment, including difficulties with logistics and the unavailability of traditional sources of imports.

Mikhail Burmistrov, CEO of Infoline-Analytics, believes that in a situation of consumer savings, reduced traffic in shopping centers, as well as the rapid growth in sales of children’s goods on large online platforms, Detsky Mir could lose interest in the status of a public company. “Recently, the group has shown modest results,” he points out.

Alina Savitskaya, Anatoly Kostyrev