Mosgorlombard extended the deadline for accepting applications for participation in the IPO for a week

Mosgorlombard (MGKL) has extended the deadline for accepting applications for participation in the IPO by a week – until December 21. The overlap in timing with a larger and more media-secured placement of Sovcombank shares could reduce potential demand. In addition, in the absence of analogues, the presented valuation of the company may not look very attractive to investors, experts note.

On Tuesday, December 12, the Board of Directors of Mosgorlombard decided to extend the deadline for accepting applications for participation in the IPO by a week, until December 21. The company’s press service explained that they “faced a large influx of questions from investors regarding the specifics of the work of the pawnshop and other units” (companies involved in the purchase, sale and wholesale trade of precious metals that are part of the pawnshop group), so “we need time with everyone work it out.” Previously, the company was going to meet the collection of applications in one week, and the deadline ended on December 13. Other issuers that went public this year collected order books longer, 9–12 days, while Eurotrans took several months (taking into account over-the-counter fundraising).

Investors were offered up to 323 million ordinary shares (which is 36% of the total number of shares). The price range was set at 3.1–3.5 rubles. per share. Thus, MGKL expects to attract about 1 billion rubles, and these funds should be used to develop a network of pawnshops. This is less than the amount raised in other IPOs that took place in the fall of 2023. In particular, Astra Group raised 3.5 billion rubles, Henderson – 3.8 billion rubles, Yuzhuralzoloto – 7 billion rubles, Eurotrans – 13.5 billion rubles. (of which most is on the over-the-counter market).

A special feature of the Mosgorlombard IPO is the fact that the initial deadlines for collecting applications overlapped with the larger IPO of Sovcombank, which intends to raise 10 billion rubles, noted Albert Koroev, head of the stock market experts department at BCS World of Investments. At the same time, the bank’s top managers almost every day in public interviews announce multiple oversubscriptions for the offered shares. Therefore, the postponement of the closing date of the order book may be associated with difficulties in covering the demand for MGKL shares with their supply, notes independent financial analyst Andrei Barkhota.

The Mosgorlombard IPO has other distinctive features. According to Arikapital Management Company strategist Sergei Suverov, there are no comparable analogues on the market to guide its valuation. At the same time, investors lack a breakthrough technological idea in the issuer’s investment history, notes Andrey Barkhota. In particular, Astra Group has an operating system that serves as a replacement for foreign analogues, and Sovcombank has installment cards, the analyst notes. However, according to Capital Lab partner Evgeniy Shatov, if we take the RAS statements for the last 12 months for assessment, then when we estimate the company’s capitalization at 4.5–5 billion rubles. the P/E multiplier (the ratio of company value to share earnings) will be 12.5–14.3, which is quite acceptable given the high growth rates of the business.

At the same time, pawnshop clients are citizens with an unstable income stream, experts say.

In this regard, their credit quality is noticeably worse than a standard bank client, Andrei Barhota points out. According to him, investors would like to see a sustainable return on equity of more than 30%. Otherwise, “other issuers, including those from the financial sector, look more profitable,” he believes. In addition, the issuer is placing too large a share of shares (36%), while previous placements were limited to 5–10%. “A large volume of free-float with a small size of the issuer indirectly indicates attempts by stakeholders to withdraw from the pawnshop’s capital,” Mr. Barhota does not rule out.

Ksenia Kulikova, Polina Trifonova