Alrosa Valued at $7.3-9 Billion Ahead of Possible IPO

(IDEX Online News) - Alrosa has been valued at $7.3-9 billion excluding debts, with a wider price range estimated at $5-10 billion, the Russian business daily Vedomosti reported today (Monday). The valuation was done by JP Morgan Investment Bank at Alrosa’s request ahead of a possible initial public offering.

Alrosa intends to reduce its debts to $3.2 billion by the end of 2010, the company announced in September.

A source close to the company told Vedomosti that the Russian diamond firm plans to offer 20-25 percent of its shares for $1.5-2.3 billion in an IPO in the next fiscal year.

The new valuation is a high one compared to previous valuations of $2.4-6.4 billion. Alrosa is an opaque company and closely guards one of the most important pieces of information for an IPO - its diamond reserves. To attract international investors, this secret will need to be revealed.

Another hurdle is the willingness of the republic of Yakutia to see its 40 percent stake in the company shrink. Currently, the parliament of the Siberian republic is considering removing legal obstacles on such a move, the newspaper added.

Alrosa plans to use the raised capital to develop underground diamond mining operations.