TCS, the Russian credit card company, has raised $1.1bn in an oversubscribed London initial public offering, the latest sign that global investors are returning to Russian equity offerings.
While TCS originally said it planned to raise as much as $750m in the deal, it later expanded the amount to more than $1bn. The final pricing gives the company a valuation of $3.2bn.
TCS priced its global depositary receipts at $17.50 each - the very top of its $14 to $17.50 intended price range. By mid-morning in London the stock was trading up at $19.42.
The deal comes as equity capital markets begin to reopen to Russian groups after months of inaction. Alrosa, the Russian state diamond monopoly, plans to finish the roadshow for its up to $1.4bn Moscow public offering this week while other groups such as Lenta, the St Petersburg food retailer, and state airlines group Aeroflot are expected to announce public offerings in the near future.
The last large Russian company to do an IPO in London was Megafon, which raised $1.7bn last year. Earlier this year, Moscow Exchange, Russia's leading bourse, raised $500m in an offering conducted on its own exchange, while Qiwi, a Russian payments company, raised more than $200m in a New York IPO.
Founded by Oleg Tinkov, a Russian entrepreneur who was previously involved in brewing beer, TCS, or Tinkoff Credit Systems, became one of the leaders in Russian consumer lending thanks to its branchless model, which allowed the company to reach into Russia's provinces while cutting down on overhead costs.
The IPO comes as the Russian central bank and industry specialists have begun to express concern over the significant growth in unsecured consumer lending with the regulator taking new measures to slow down expansion.
According to the central bank, unsecured consumer lending grew by more than 60 per cent in 2012, while credit card lending grew by close to 80 per cent.
While the ratio of non-performing loans to overall consumer lending is still relatively low, touching 5.5 per cent at the end of the second quarter, some analysts have expressed concern about certain consumers who are taking out multiple loans to repay existing debt - a scheme that could begin to unravel as Russian economic growth slows.
As part of its IPO, TCS has raised $175m of new capital while its existing shareholders, including Mr Tinkov, Goldman Sachs, and funds Baring Vostok, Vostok Nafta and Horizon Capital, have sold $912m worth of existing shares.
After the deal, Mr Tinkov will hold 50.9 per cent of the company, Goldman 4.5 per cent, Vostok Nafta 4.8 per cent, Baring Vostok 2.9 per cent and Horizon 1.4 per cent.
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