Lada maker revs up for pounds 1bn London flotation
AVTOVAZ GROUP, one of the largest car manufacturers in Russia and maker of the famous Lada, is preparing to seek a
listing on the London Stock Exchange later this year with a market value of up to pounds 1bn.
The company, which produced 700,000 cars last year and had revenues of $4.1bn ( pounds 2.2bn) is among the 20 most
profitable companies in Russia. It has a 50 per cent share of the car market in Russia, due in part to high import
tariffs which prevent cheap imports from competing in the market.
The company is already listed on the Russian RTS stock exchange and is capitalised at about $1bn. However, its market
value is expected to be worth more by the time it lists in London. The company may also raise new money when it
floats.
It is in the process of appointing an investment bank to advise on the float. It is believed to have close links with
Deutsche Bank which recently provided the company with a $250m unsecured loan. Last week Avtovaz successfully placed
R3bn ( pounds 57m) of rouble-denominated bonds.
While the Russian car manufacturing industry is seen as low cost, it is old-fashioned and inefficient and desperately
requires fresh capital to invest in new models and production facilities.
One executive close to Avtovaz said: "London is seen as a friendlier and more accessible environment for
Russian-based companies than going all the way to Wall Street."
Avtovaz already has a link with General Motors, which is building versions of the Opel Astra at one of Avtovaz's
car plants, and there is industry speculation that the US manufacturer could take an equity stake in the company.
Ladas are the butt of jokes about their poor performance and dull image. But the company is rebranding its products
and has appointed Abbott Mead Vickers-BBDO, the London advertising agency, to improve their image.
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