Metro Group plans to sell up to a quarter of its Russian Metro Cash & Carry operation in an initial public offering (IPO) on the London stock exchange in the first half of the year. The move is seen as part of efforts to accelerate expansion in the country. Russia is considered by Metro Group as a key market for future development.
CEO Olaf Koch stated: “A stock market listing is expected to give the Russian Cash & Carry business further opportunity to realise its growth potential. Furthermore, the transaction will provide Metro Group with additional strategic flexibility for investments and create further de-leveraging potential.” He added: “We expect a listing to enable us to expand our business in an even more dynamic way and to strengthen the balance sheet of Metro Group at the same time.”
Despite its political and economic challenges, Metro Group identified Russia as one of its global top priority growth markets a few years ago – together with China and Turkey. In Russia, the company has a presence with its Metro Cash & Carry banner and its Media Markt consumer electronics arm, having sold its Real operation to French retailer Auchan in March 2013 in order to focus on core activities and reduce debt.
For some years now, the group’s low profits have impacted on its ability to invest in restructuring and international expansion. As far as Russia is concerned, the company’s management has made no secret of the fact the business could expand faster. According to one recent statement by Koch, the company could add around 10-15 stores a year to its current network of around 70 outlets. However, the reality has been somewhat different so far with an opening rate of about five new stores per annum. This partial IPO is a means of funding acceleration without placing undue pressure on the balance sheet overall.