Alrosa IPO Still on the Table

Alrosa President Andreyev wants to see an IPO taking place but is not quick to allow a needed transparent corporate culture

Russian diamond monopoly Alrosa said Tuesday that it is still considering going public, the Russian press reports. According to Alrosa President Fyodor Andreyev, Alrosa will become a joint-stock company and sell shares to investors in the Sakha republic.

A public issuance has been on the table for a number of years, but never materialized. Alrosa is suffering from large debts and an opaque management, which keeps investors away.

“The crisis is not over, a second wave is expected,” Andreyev told local lawmakers, according to a transcript published on the parliament's web site. “In these conditions, the company needs to be able to raise capital, which is only possible after creating a joint-stock company.”

Aware of the obstacles ahead, Andreyev added that it is “easier for a joint-stock company with a transparent management system to raise low cost loans.”

Alrosa’s outstanding debt is currently about $3.4 billion, and costs the company 15 billion rubles ($474 million) annually, Andreyev was quoted saying.

Andreyev, however, was cautious about making the company more transparent saying this must be done gradually.

Russia holds a 50 percent plus one share stake in Alrosa, and the Sakha republic holds another 32 percent. Regional diamond-mining districts own another 8 percent of the company, with the rest held by labor unions.