Syktyvkar Tissue Plans IPO Later this Month

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One of the largest tissue enterprises in Russia, Syktyvkar Tissue Group (STG) plans to conduct its first initial public offering on the MICEX at the end of this month. The company plans to raise up to RUB 700 million by offering up to 30% of its increased issue capital. The price range is from RUB 11.4 to RUB 14.5 per share. STG is valued at around RUB 2.68 billion, or RUB 16.65/share ($89.18 million, or $0.55/share), the company notes.

STG owns one of the largest tissue factories in Russia, which produces mainly base paper, toilet tissue, paper towels, and napkins. In terms of production volume, STG held 8% of the local toilet paper market (third place) and 26% of the local base paper market (first place) in 2010. The company launched paper napkins and towels production in 2008 and reached 2% of the Russian market in 2010. STG produces tissue from various raw materials (pulp and wastepaper) and targets diverse residential groups of both cost-effective and premium segments. STG's base paper is also supplied to foreign producers, including SCA and Metsa Tissue.

STG plans to direct proceedings from the IPO to a EUR 60 million (to 2015) investment program aimed at upgrading existing capacities and acquiring new facilities both in Syktyvkar and the Central region. As a result of the investment program, STG foresees an increase in sales from RUB 1.8 billion in 2010 to RUB 4.5 billion in 2015, and a net profit increase from RUB 93 million to RUB 500 million.

STG began production in 1972 as a tissue division at Syktyvkar Timber Processing Complex, Russia’s largest forestry factory at that time. The company’s mills have modern tissue lines supplied by Metso, Fabio Perini, and SDF, with a combined capacity exceeding 50,000 metric tpy of base paper and 275 million standard rolls, or 14 million standard packs.