Report: Magnit may double buyback offer after strong demand

MOSCOW, Jun 28 (PRIME) -- Russian retailer Magnit may roughly double the number of blocked shares it buys back after seeing strong demand from Western investors keen to exit Russian holdings, Reuters reported on Wednesday citing two sources familiar with the matter.

The offer to buy back shares at a 50% discount is the first proposal of its kind by a Russian company since Western sanctions prompted by Moscow's operation in Ukraine and subsequent Russian countermeasures deprived many foreign investors of the ability to trade in Russian securities.

More than 60% of Magnit's shares are free-float, with shareholders including major Western asset managers such as Blackrock, Pictet and Dodge & Cox, Refinitiv data shows.

Strong interest shown by foreign investors has led Magnit to consider widening the offer from 10% currently, said the sources, who asked to remain anonymous due to the non-public nature of the information.

Magnit did not respond to a request for comment. The company's Moscow-listed shares rose on the news, reversing a modest decline to stand up more than over 2.5% as of 11.08 a.m. GMT, outperforming the wider market.

Should Magnit's offer succeed, it could open the door for other companies to follow suit and allow Western investors to recoup more blocked funds, the sources said.

"Finally, someone has given big and institutional investors an opportunity to exit assets in Russia, in which they have no prospects," another of the sources said. "Everyone likes the fact that you can exit not only in rubles, but also in euros and dollars and to foreign accounts.

"So far, no one has offered this."

VOLUNTARY TENDER OFFER

Magnit first announced the tender offer, in which its wholly-owned subsidiary Magnit Alyans would buy up to 10,191,135 of Magnit's shares at 2,215 rubles per share, on June 16.

Magnit received approvals from the Russian government, which demands 50% discounts on asset sales involving foreigners, including the option for investors to receive funds in rubles, dollars, euros or yuan in bank accounts in Russia or abroad.

It is too early to gauge which currencies most investors are favoring, said a second source.

"Every investor evaluates risk differently, which currency is better or worse for them," the source said.

Crucially, the deal would enable investors to extricate funds from special "type-C" accounts, access to which is blocked unless Russia grants waivers.

"The deal is structured in as comfortable and friendly a way as possible for Western investors, especially considering the current environment," the second source said.

(85.0504 rubles – U.S. $1)

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