Russian franchisee Domino's Pizza estimated itself at $422 million

DP Eurasia will place shares on the London Stock Exchange.
Master franchisees Domino's Pizza in Russia, Turkey, Georgia and Azerbaijan - DP Eurasia company set the price range for the upcoming IPO on the London Stock Exchange at 2-2.3 pounds, the company said for investors. Accordingly, the company's market capitalization may reach 291-331 million pounds ($ 371-422 million). The final value will be announced on June 28, 2017, it is expected that the trades will begin on July 3, 2017. DP Eurasia expects that more than 65% of shares will be floated in free float, and does not exclude the option of redistribution if the number of bids exceeds the offer.

The placement will take place on the London Stock Exchange, DP Eurasia plans to sell part of the shares held by Fides Food Systems Cooperatief (owned by the Turkish Private Equity Fund II) and Vision Lovemark Cooperatief (owned by DP Eurasia CEO Aslan Sarang). Global coordinators and bookrunners of the transaction are Morgan Stanley and Citi.

The funds raised will go to corporate needs, including the opening of new restaurants in Russia, the company said in a statement. DP Eurasia is the fifth-largest master franchisee of Domino's Pizza. As of March 31, 2017, DP Eurasia had 571 establishments: 488 in Turkey, 76 in Russia, four in Azerbaijan and three in Georgia. In 2017, the company plans to open another 70 restaurants: 40 in Russia and 30 in other regions.

"We look forward to the start of a new stage in our company's life as a public one, which, combined with a successful business model, will accelerate growth in our very attractive and unfilled markets," Saranga said in the message.

According to Euromonitor Inter-national, Domino's Pizza is the third largest player in the Russian pizza market: in 2016, sales amounted to 1.4 billion rubles. (See the graph). Attracting financial resources without increasing the debt burden will allow the company to accelerate growth in Russia, said Mikhail Burmistrov, general director of Infoline Analytics. In the fall of 2015, in Russia, because of the crisis, segments began to grow that allow you to quickly and inexpensively snack, including pizza, says Natalia Aristarkhova of the NPD Group. According to her, the situation in the pizza segment is mixed: by the number of restaurants it is close to saturation, but it will grow due to delivery to the house. In January-April 2017, the pizza segment grew by 11% yoy, Aristarkhov said. Competition in Russia is high, consumers are more attracted to the segment of burgers, Japanese formats and catering establishments with a national flavor, for example, "Kroshka-potato" and "Teremok", warns Burmistrov.