Pinchuk's Geo Alliance to conduct 34.1% share IPO worth $260 m on WSE

Geo-Alliance Oil-Gas Public Limited (Cyprus), the holding company of Geo Alliance Group with assets in Ukraine, has announced plans to carry out an initial public offering (IPO) on the Warsaw Stock Exchange (WSE) in late November or early December.

A report on the IPO published on Thursday says that up to 8.625 million of shares, including five million newly issued shares, and up to 1.125 million greenshoe shares would be offered to investors.

In case of the sale of the shares (without the greenshoe option), the free float of the company's shares will reach 34.1%. Currently all of the shares belong to several discretionary trusts created mainly in the interests of Ukrainian businessman Viktor Pinchuk.

The maximum price of shares is set at PLN 87 per share ($30.15 at a current rate), which allows to assess the IPO at PLN 750 million ($260 million), and its maximum size with the greenshoe option is estimated at PLN 848.3 million ($293.8 million).

It is expected that the bid book would be formed from November 18 to November 30, 2010 and the price of the IPO would be announced closely to November 30. Retail investors will be able to subscribe for shares only under the maximum price.

Geo-Alliance's shares are to be listed on the exchange on December 9 or close to that date.

UniCredit Bank A.G. (London Branch) is the lead manager of the issue, and Concorde (Bermuda) Limited affiliated with Kyiv-based Concorde Capital is the co-lead manager.

"There is great demand and big opportunities for production development on the Ukrainian market where we work. We have 16 fields. We're realizing an investment program and plan to drill and launch 21 wells in 2011-2013," Geo-Alliance CEO Leonid Petukhov said.

The group plans to spend funds on the realization of the investment program raised from the sale of five million shares of the new issue (PLN 435 million at the price of a share of PLN 87). Taking into account that expenses on the IPO would amount to some PLN 37 million, around PLN 398 million ($137.2 million) could be available for the realization of the program.

The company said that the realization of the investment program for 2011-2013 requires UAH 827 million in investment. In addition, the group plans to conduct several studies and realize some pilot projects worth UAH 180 million. Geo Alliance needs UAH 1.017 billion as a whole ($128.1 million).

The group has 16 licenses for natural gas and oil extraction, mainly in the eastern part of Ukraine. In H1, 2010 Geo Alliance extracted 66.4 million cubic meters of gas, which is 13% up year-over-year.

The company saw EUR 29.7 million in income in 2009, and its net profit stood at EUR 13 million, while in H1, 2010 these indicators were EUR 15 million and EUR 7.6 million respectively.