The SigmaBleyzer private equity firm, owner of Volia, Ukraine’s largest cable TV and Internet providers, last week denied it planned to put the company up sale.
“Such reports are not correct,” said Alexander Chapko, the firm’s chief of public relations on August 29. “What we are doing is beginning the consideration process for an initial public offering (IPO) of Volia stock, with no plans whatsoever for a sale of the system.” Chapko went on to emphasise that the company is only in the very preliminary stages of establishing what the correct valuation of Volia might be, should the firm decide to exercise its option to float an IPO.
“We have asked a number of the top investment banking firms to give us their best estimation of Volia’s value, should the company make a decision to move forward with an IPO sometime in the future. We have no in-house expertise in such evaluations and as has always been company policy, we are seeking advise from the best sources available before making such an important decision. At this point, we cannot be sure when such information might be in our hands and therefore cannot say definitely when our internal decision-making process might move forward,” Chapko added.
Fixing a price
Investment sources in Kyiv told Business Ukraine they believe that SigmaBleyzer has sought the services of two of the world’s most prominent investment banks, UBS of Switzerland, the world’s largest manager of private wealth assets, and the top American firm, Goldman Sachs, in reaching a valuation of Volia. UBS’ Moscow office, believed to be handling the matter for SigmaBleyzer, specifically declined to comment. No reply was received to Business Ukraine’s inquiry to Goldman Sachs. Alexander Paraschiy, telecommunications analyst with Concorde Capital in Kyiv, said he believes that a SigmaBleyzer IPO for Volia would be well-advised. “I believe Volia may be going to the market at the right time. The company has occupied the Kyiv City market and has expansion plans in other cities. Their performance and growth pattern are both very good. They are going to need money for further development and this is a good time to attract that money.”
Into the new EU
Chapko said he believes any confusion about a possible sale of Volia might be related to SigmaBleyzer’s expansion in other areas. He pointed out that the firm, which has in the past concentrated its interests in Ukraine, made a strategic decision to look for investment opportunities in other parts of eastern Europe, particularly southeastern Europe. SigmaBleyzer has already opened offices in both Romania and Bulgaria, specifically staffed to investigate emerging opportunities in those countries and surrounding areas.
“SigmaBleyzer tends to concentrate its efforts in those areas in which it has very well established experience and expertise. Therefore, our search for new opportunities will include the sectors of telecommunications, food processing, high technology and machine-building,” Chapko said. Local press in Romania recently reported that SigmaBleyzer has already entered the Romanian dairy market with the idea of tapping into growing potential there. Radu Bugica, manager of the group’s Romanian operations, told the DairyReporter.com that SigmaBleyzer had already completed its acquisition of a stake in a local dairy group, Covalact, in furtherance of its interest in dairy processing in the country, particularly yogurts and cheeses. Bugica would not confirm reports that SigmaBleyzer had acquired a majority of 70% of Covalact’s shares for about EUR 7 million.
Consumer analyst Euromonitor reported earlier that economists expect dairy industry growth in Romania to reach EUR 633 million by 2008, an EUR 150 million jump since 2005.
Chapko said that in furtherance of its interests in Bulgaria and Romania, SigmaBleyzer earlier this year closed its fourth fund, the SigmaBleyzer Southeast European Fund IV (SBF IV). The Fund closed at EUR 250 million (USD 326 million), the maximum amount allowed by the partnership agreement, and 25% above its target, making it the largest private equity fund in Ukraine and one of the largest funds in southeastern Europe. At its launch in August 2005, the target amount for SBF IV was set at EUR 200 million. “SigmaBleyzer will continue its long-time policy of making controlling investments in high growth potential companies in the consumer sector. This policy of investing in partnership with management has shown over the past 12 years that it can create a specific competitive advantage, accelerate growth and create value in portfolio companies,” Chapko added.
