Not everything is O'key: why the capitalization of a supermarket chain is not growing

Forbes figured out what retail owners have in addition to a major supermarket chain.
06.12.2016
Forbes
Origin source
On the morning of December 13, 2014 in the hills located in the Georgian region of Kvemo-Kartli, explosions that shook the whole of Georgia. Company Rich Metals Group (RMG), the only gold producer in Georgia, preparing to start open pit mining, destroyed in a few seconds the oldest gallery in the world gold mine. Archaeologists who have studied the local galleries since 2004, estimate their age at 5,000 years. The indignation of public organizations for several years fought for the preservation of a historical monument, has supported the Georgian Catholicos-Patriarch Ilia II, who the next day demanded to punish the perpetrators. Former Georgian President Mikheil Saakashvili compared the incident with the destruction of the Buddha statues in Afghanistan by the Taliban and said the RMG belongs to relatives of his political opponent, billionaire Bidzina Ivanishvili, who carry out the order of the Kremlin. In fact, the owners of the company were very different billionaires - the co-owners of hypermarkets "Okay," Dmitry Troitsky and Dmitri Korzhev.

If not for the scandal, businesses would hardly appeared in public. Trinity, by his own admission, in November 2014, to reassure the public, reluctantly for the first time agreed to a media interview - Georgian television station "Imedi". Then a picture of him with the caption in the Georgian first hit the Internet, where, during the preparation of the next rating of Forbes billionaires saw her correspondent contacted the businessman and started to make an appointment. It was only one and a half years in the "Okay" the Moscow office of the Trinity, and their partner Korzhev Boris Volchek got together and agreed to tell Forbes about his business.

The atmosphere in the office ascetic - table, chairs and a board on which you can draw a marker. Businessmen who are not used to communicate with journalists and answer questions succinctly. All of them were born, grew up and studied in St. Petersburg. Trinity with Korzheva friends with study time at the Leningrad Shipbuilding Institute. His father was the captain of the Trinity research ship "Cosmonaut Georgy Dobrovolsky" and "Professor Vize". With Volchek, who graduated from the Leningrad Institute of Railway Transport Engineers, the friends familiar with the mid-1990s, and in business, who later became the "OK" network, together since 2000.

In the 1990s, at Volchek I was in St. Petersburg supermarket "civilian" and a couple of plots of land suitable for the construction of hypermarkets. At Trinity and Korzheva partners was also a land of 3 hectares, which they bought from businessman Shabtai Kalmanovich and Vladimir Kehmana for $ 600 000. At this stage the first hypermarket "Okay", which opened in May 2002, was built.

Optimistic name coined Volchek. "We were advised that the name was a little west, but friendly. I was at some point it dawned. Everybody liked it, it seemed laconic ", - says the businessman. The model for the first stores, "Okay" became Scandinavian hypermarkets. Consultant Specialist Haig was Estonian Kera, who had experience in these networks.

In St. Petersburg, then worked four large store network "Lenta", but "Okay" was another, more civilized. "They were founded upon the classic Western European format, and we had a hard discounter with large rooms, concrete floors, huge racks and pallets between them", - says the founder of "Lenta" Oleg Stallions. "The market was then empty. We literally taught shoppers to use a store with a huge selection. Heat, light, parking nearby. We had a friendly guard who recommended buying carry on a trolley right up to the car - says Volchek. - The people of that time was a bit wildly, but consumers quickly adopted and appreciated our format. " Concept shot partners enthusiastically set to work, and in five years opened stores not only in St. Petersburg, and Rostov-on-Don, Krasnodar, Togliatti and other regions.

In 2009 he opened the first hypermarket "Okay" in Moscow. At this time, the company led by Patrick Long, who 27 years working in Auchan. In the crisis 2009, the network has become the leader in revenue growth (by 32.7%, to 67.9 billion rubles, revenue was nearly seven times lower than in 2005), "Lenta" surpassed sales and ranked third in the list of the largest Russian retailers.

In November 2010, the company successfully completed an IPO on the London Stock Exchange (LSE). Investors appreciated the "OK" in the $ 3 billion, the co-owners rescued from the sale of shares of $ 420 million, of which $ 167 million went to development companies and debt repayment. The road show was attended Trinity and Volchek. They spend hours courageously answered the questions of Western funds. According to the Trinity, especially painful had breakfast with investors. He first visited in America spent one day in New York, and one - in Boston. The company went public, but its shareholders and did not hit the camera lens - the day of the placement of shares on the LSE could see only the management team led by Longuet. Yet it was the finest hour: thanks IPO Korzhev Trinity and became billionaires in 2011 appeared on the Forbes list.

Today, the largest private shareholder of "Okay" - Volchek, he indirectly owns 28% stake in the company. 51% - in Cyprus Nisemax Co Limited, whose shares are divided between the Trinity, Korzheva and another student Andrey Semenov: Trinity and Korzheva owned by 23.5% "Okay" shares, and Semenov - about 4%.

Despite the parity, and Trinity Korzhev, unlike many Russian businessmen do not quarrel and do not divide the assets. "For personal qualities, I think we are well complement each other. I was lucky with the partners - normal, adequate, decent people. We have been in business a lot of difficult issues, but we all have enough intelligence to maintain good relations for the sake of the common cause "- says Volchek. Yet one of the first current shareholders equal partners "OK" parted.

Partner from Tallinn

One evening in August 2016 one of the richest Estonian Hillar Teder people resting after a hot day in the restaurant at the Moscow River. He admired the Russian capital, sipping wine with his wife and friends. Two Dmitriev - Trinity and Korzheva, which Teder to establish joint business with the early 1990s, this dinner was not. "One life is so developed that were more than 20 years together, and now for many years did not see each other", - says the businessman without emotion. No conflict, according to him, did not arise between the partners.

His founding states, "Okay," largely due to just Teder.

Trinity met with Estonian, when he arrived in Tallinn in 1991. In Teder, who worked in one of Estonia's cooperatives were due at the factory, which received a large shipment of "Zhiguli" barter in exchange for the seat belts. Re-export "eight" and "nine" flew to Russia while faster Vana Tallinn liqueur in local bars. Business went straight.

In 1993, the partners established in St. Petersburg company "Mega-cars", which opened three auto-focus for the sale and servicing of cars Volga car for a couple of years. Teder We were so well-connected that the machines soon began to give to the implementation in Russia even without pay - under his bail. In 1994, the partners in Tallinn privatized former Soviet autofocus Lada, in 1997 auto business in Russia has grown to the dealership Hyundai, 1998 - to the Audi. Relations with Estonia provided access to cheap money. As Teder said, getting loans from Estonian and then have come in their place of Swedish banks was much easier and more profitable than the Russian. "We took out loans, and two and four million dollars", - he says.

It did not stop the car. One day, looking at the food exhibition hall in Tallinn, Trinity, Korzhev Teder and drew attention to the stand of the Estonian juice producer. We inquired about the power of the enterprise, prices and immediately ordered 20 tons of juice for delivery in Russia. All went well. But 40 tons of juice from the second batch was spoiled because of the broken refrigerator in the way. This led to the idea of ​​creating their own production in Russia.

The equipment took from Tetra Pak Leasing, rented a room in St. Petersburg and in 1995 launched a juice production plant, "Multon". The 1998 financial crisis swept from foreign competitors from the market, in difficult situations helped Tetra Pak, interested in preserving the local juice production. In 1999, "Multon" produced 26 million liters of juice a year, five years after the opening of new lines and another plant in the Moscow region - nearly 200 million liters (brand Nico, Rich, «Good"). Reteylom entrepreneurs engaged in parallel with the juice business. According to Teder, once they saw the crowd at the entrance to the supermarket, which opened in built them in 1998, the largest in Tallinn Rocca al Mare shopping center: "People for two hours standing in line. Wow, we thought, what an interesting business! "Then the land was purchased from Kalmanovich and Kehmana, which" began to slowly build. "

In 2005, Trinity juice business, and Teder Korzheva bought Coca-Cola, paying $ 501 million, "Everything that can be achieved in the juice market," Multon "reached, -., Said after the deal, Managing Director Alexander Cretan company. - Investing further in the market for our ambitious shareholders meaningless. They need big projects, and there are plenty of fast-growing and more intensive markets, such reteyl and "pischevka". In 2006 the partners sold "Wimm-Bill-Dann" for $ 64 million Ochakovo Dairy Plant, which bought in 2002 for far less money. Funds from the sale of juice and dairy projects have been sent to reteyl. Prior to the sale, "Multon" and "Ochakovo" group "Ok" held only six hypermarkets in St. Petersburg, in a few years there were already 16.

While the share of the four partners were divided almost evenly - Volchek owned 25% shares of "OK", Korzheva, Trinity and Teder - by 23.3%, 5% had Semenova. In 2008, the "Okay" was already 37 stores. Inspired by the success in Russia, the founders are thinking about overseas projects. We look closely to Belarus, Kazakhstan and even China, but stopped in Ukraine, Georgia and Armenia.

Nezolotye veins

By 2007, the owners agreed to open "Okay" retail network in Ukraine, and they had to take a completely new business in Armenia - mining. The idea belonged to Trinity, he urged the partners to start developing Armanis gold-polymetallic and Dastakert copper-molybdenum deposits. Trinity was encouraged, Korzhev, as always, calm and Estonian partner did not hide discontent. "Nature I liked, but everything else is not - says Teder. - We were able to build hypermarkets and shopping centers, able to trade, and that it was necessary to deal with. " But to convince Trinity Teder failed. As a result, the extraction of copper and gold in Armenia and Trinity Korzhev do yourself. "I wanted to go into another industry, away from the consumer market to the more complex" - explains the Trinity.

In their group Global Metals include two companies - "Sagamar" and "molybdenum Ashkhar", both seven years since the start of the project in a poor state. Revenue "Sagamar" on results of 2015, according to reports, was less than $ 5 million (2014 - $ 8.8 million), and the cumulative loss - $ 51.9 ppm U "molybdenum Ashkhar" revenue in 2015 was slightly more than $ 2,000 , a company with assets of $ 6 million had a negative equity of $ 2 million. In fact, the projects are frozen. At the same time the partners have invested in the Armenian mining giant projects for the country's $ 200 million. What went wrong?

According to general director of Global Metals Karen Ghazaryan, the culprit was the fall in world prices for non-ferrous metals, "very limited supplies and low metal content in the ore." "When we acquired the license for Dastakert mine, the price of molybdenum has reached $ 60 000-70 000 per ton, and now only $ 10 000," - he said in the spring of 2016 in an interview with "Business Express". Korzhev Trinity and its projects in Armenia not comment. "I once almost bought some nickel deposit, the oil field in Kazakhstan, - says Chairman of the Board" Yulmart ", former co-owner" Tapes "Dmitry Kostygin. - When there is an opportunity to invest, there are different fantasy than ever get rid of them the better. At first, everything seems easy, but then it turns out that things are not easy. "

Teder idea to develop business in Ukraine, too, was unsuccessful. In 2007-2008, four stores were opened - in Kiev, Krivoy Rog, Zaporozhye and Kharkov. Already in June 2009, all the shops were closed, suppliers do not even have time to pick up your goods. A year later, it began bankruptcy, which ended with the settlement agreement in 2015. Three hundred suppliers received 5% of the total amount of debt - 7.5 million hryvnia at all. "The Ukrainian market was not as rich as we thought - said Teder. - In Ukraine had neither the money nor the management, since then we have been actively developing the Moscow market. " In Ukraine, according to him, it was invested $ 200 million, ending the campaign was the sale of Ukrainian stores "Auchan", "at the price of racks."

But that was a personal matter Teder. In Ukraine, the split of the Russian-Estonian partnership.

Teder departed Ukrainian and Estonian property (several shopping centers), with Trinity Korzheva - Teder part of the share in the "Okay", and mining projects with which Trinity could not leave.

In June 2012, he was on a par with Korzheva acquired the entrepreneur Siman Povarenkin (Acmero Capital) Georgian company "Quartz" (gold mining) and "Madneuli" (production and export of copper) for $ 120 million. After the purchase of the name was changed to RMG the Gold and RMG Copper, the company merged into the holding Rich Metals Group, today it is the only manufacturer and exporter of gold in Georgia. In the fall of 2013 at the enterprises went on strike the workers demanded better working conditions and higher wages. A compromise could be found only in March 2014. In 2013, the company's revenue from gold exports decreased by 16.7% to $ 73.3 million in 2014 to $ 39.3 million.

Another almost insoluble problem began archaeological excavations at the field near Sakdrisi in Kvemo-Kartli. tools were found stone hammers and other artifacts which prove that this place was mined gold in IV-III millennium BC. e. "This is the most ancient monument of mining gold mining method, - explains a senior fellow at the Georgian National Museum, archaeologist Georgi Mindiashvili. - The depth of one of the tunnels leading to the gold veins was 37 meters. " Joint work of Georgian and German archaeologists funded by Volkswagen Foundation.

It seemed that the expedition findings about the inadmissibility of production in this place gold pit method can not be challenged. However, in the spring of 2014 the Ministry of Culture deprived the ancient mine status of a monument of historical and cultural heritage. In December, they were blown up. "It was terrible. Such a sad story, I thought, is only possible in the movies, "- says the head of the expedition from the Georgian side, Irina Gombashidze. According to her, the previous owners of the field, archaeologists were on good terms, but the new cooperation did not go. The compromise still has been found: a few findings collected over ten years, will soon become part of a new exhibition in the State Museum of Bolnisi district, built on RMG funds.

According to the Trinity, at the time of purchase of the Georgian company was in a difficult situation. The main problem was the depletion of the resource base, but RMG exploration work over four years has opened several new fields. "We are engaged in the development of all aspects of this business, which to us has not been done. Now you can look to the future with optimism ", - he says.

At the end of 2015 the company's revenue from gold exports increased by 58%, to $ 62.1 million, the division's revenue, is engaged in mining of copper ore and concentrate production - by 9.1%, to $ 270.6 million in total Georgian exports share. revenue from the sale of gold and copper increased by 5 percentage points, to 15.1%

"Active perspective, - says Director of Investment Acmero Capital Denis Russinovich, who sold the field Trinity. - We did not plan to sell it, the initiative came from the buyers. They offered good money - we have sold. Subject monuments in mining occurs constantly, and these issues can be solved. "

Investors in oblivion

Do you regret Teder that divided the business with partners and lost stock, "Okay"? He says it is committed to love and know how - builds and manages real estate. Since the IPO the share price, "Okay," fell by more than five times, the company's capitalization is $ 560 million. And its owners are rolling up their sleeves running again. In 2015 the company was headed by the very Hague Kera, who stood at its source. In September 2015 the group opened its first discount stores under the name of "Yes!". Now they have 50, but only in the group, "Okay" 159 stores. The new direction was headed by Armin Berger, who worked as a managing director in a large German discount chain Aldi. In 2012, he joined the "Fresh Market" company's board of directors, which is created in the "Okay" holding company specifically for the development of the network, "Yes!". Nevertheless, until the "OK" looks worse than the competition: P / S is 0.2 while the industry average of 0.5 (the leader of "Magnit" the multiplier is equal to 1), EV / EBITDA - 6,2 when the industry average 7.6 (the "Magnit" - 11).

Why is capitalization not growing? Construction discounters network requires large investments, and investors perceive the investment as a non-traditional hypermarkets and, according to Volchek, "yet do not believe in this start." "Apparently, we do not pay enough attention to this issue. We are silent, not to pursue an active PR campaign, so we live with the fact that the value of the company on the stock exchange does not reflect its real value, - says Volchek. - The company generates about $ 190-200 million, cache, and thus its value on the stock exchange of $ 500 million That's ridiculous. ". Mikhail Burmistrov, General Director of information-analytical agency «INFOLine-Analytics", said that the three-year strategy for the development of the company was invited by the head of analytical department of Goldman Sachs in the region of Eastern Europe, the Middle East and Asia, Anton Farlenkova that was an important positive indicator for investors. At the end of 2016, "Okay" strategy may be submitted. "Investors are asking us to strategy, we have prepared it, but we want to carefully lick," - says Volchek. He himself was in the past six months has increased its stake, "Okay" from 25% to 28%.