21st Dec 2007 11:25
Aurora Russia Limited21 December 2007 21st December 2007 Aurora Russia Limited invests £16.1 million for a 24.3% stake in SuperStroy, the largest DIY retailer in the Urals region Aurora Russia Limited ("Aurora Russia"), the AIM-quoted investment vehicleestablished to make equity or equity-related investments in small and mid-sizedprivate companies in Russia, announces an investment of £16.1 million in cashfor a 24.3% stake in Grindelia Holdings Limited which owns 99.5% of the retailchain which operates under the brands "SuperStroy" and "StroyArsenal"("SuperStroy" or the "Company"). Superstroy is the largest DIY retailer in theUrals region of Russia, home to approximately 20 million people. Aurora Russia'sinvestment will take the form of new equity and will be used to redeem certainexisting loans and finance the further expansion of the Company's retail chainin and beyond the Urals region. SuperStroy is the fourth company that Aurora Russia has invested in since itsadmission to AIM in March 2006. Aurora Russia's three other investments are OSGRecords Management, the leading records management company in Russia,Kreditmart, a leading Russian mortgage broker and Unistream, Russia's leadinginternational money transfer company. Of the £71.5 million net funds raised byAurora in March 2006, £56.8 million has now been committed. Aurora retains ahealthy pipeline of potential investment opportunities in the business, consumerand financial services sectors in Russia. About SuperStroy SuperStroy opened its first store in 1994 and is now the largest DIY retailer inthe Urals. The Company has successfully expanded its retail network andgeographical presence with strong and well-recognised brands. By the end of2007, the Company will be operating 34 stores comprising 31 SuperStroy storesand three StroyArsenal hypermarkets with a total selling space of more than53,000 m2. The SuperStroy stores are generally 500 to 2,500 m2 in size with thelarger StroyArsenal hypermarkets ranging between 7,000 and 12,000 m2. SuperStroyis a market leading DIY brand in the major Russian cities of Yekaterinburg whichis Russia's third largest city, Ufa, Tyumen and Perm. For the year ended 31 December 2006, the Company generated revenues ofapproximately 2.7 billion Roubles (£54 million at the current exchange rate).Revenue for the 2007 financial year is expected to be about 4.4 billion Roubles(£88.2 million), an increase of 63% from the prior year. Plans for growth The Company intends to grow its store portfolio to 74 stores, encompassing atotal selling space of approximately 290,000 m2, by the end of 2011. SuperStroywill initially focus on developing the business in cities with populations ofmore than 0.5 million people. The DIY market in Russia Over the past 5 years, the average annual growth rate of consumption per capitain DIY goods in Russia has been the highest among the Eastern European countries(Source: Euromonitor). The Russian DIY market is forecast to grow atapproximately 12% per annum in the 2007 to 2011 period and the regions areexpected to be the key driver of this growth. In 2006, the overall DIY marketsize in Russia was estimated to be between $7.8 billion and $10.2 billion. Ofthis total market, about 60% was attributed to the Moscow and St. Petersburgmarkets and only about 30% attributed to DIY chain retail (non-chain retailincludes construction markets, exhibition malls, etc). The Russian DIY marketcurrently lacks strong federal and regional players and SuperStroy's strategy isto enhance its position as the regional market leader. The Russian DIY market also provides consolidation opportunities, as the 5 topplayers only control about 16% of the market in monetary terms. Expenditure onDIY products per capita is substantially lower than in other Eastern Europeancountries, indicating further room for growth in the Russian DIY market over thenext 5 to 7 years. According to Euromonitor's estimates, by 2011 DIY goodsconsumption in Russia will reach €68.3 per capita up from €42.9 at the end of2006, an increase of approximately 60%. Commenting on the investment, John McRoberts, Director of Aurora Russia Limited,said: "The investment in SuperStroy gives Aurora Russia a 24.3% stake in the No.1 DIYretailer in the Urals region. This adds to our impressive portfolio of marketleading Russian companies which include Unistream, which recently became theNo.1 international money transfer company in Russia by volumes transferred,Kreditmart, fast becoming the No.1 mortgage broker and OSG, the No.1 recordsmanagement company in Russia." Commenting on the investment, Kataev Vladimir Borisovich, General Director ofSuperStroy, said: "We are delighted to have Aurora Russia as a major investor. Aurora have theexpertise and strong track record of investing in leading and growing Russiancompanies, we are convinced that we have a partner who can further drive ourimpressive growth." Enquiries: Aurora Russia LimitedJames Cook, Moscow +7 495 644 1662John McRoberts, London +44 20 7839 7112 Financial DynamicsEd Gascoigne-Pees +44 20 7269 7132Felicity Murdoch +44 20 7269 7243 Notes to Editors: About Aurora Russia Aurora Russia floated on the Alternative Investment Market of the London StockExchange on 24 March 2006. The Company has been established to make equity orequity related investments in small and midsized private Russian companiesfocused on the financial, business and consumer services sectors where theDirectors believe there is potential for growth together with viable exitopportunities within two to four years of making such investments. The Companyintends to provide its investee companies with the necessary capital to continueto expand and develop. The Manager shall provide hands-on operational support todeliver significant step changes in performance and value creation. Aurora Russia targets companies with Enterprise Values of up to approximately£100 million and seeks to secure blocking or controlling stakes and boardrepresentation. The Company intends generally to take equity stakes of greaterthan 20% in each portfolio company. It is anticipated that each equityinvestment will typically be between £5 million and £25 million. For more information please visit www.aurorarussia.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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