DJ Fix Price confirms intention to float on Main Market of London Stock Exchange
Fix Price Group Ltd. (FIXP)
Fix Price confirms intention to float on Main Market of London Stock Exchange
22-Feb-2021 / 10:00 MSK
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014
(MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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OR JAPAN OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS ANNOUNCEMENT.
Neither this announcement, nor anything contained herein, shall form the basis of, or be relied upon in connection
with, any offer or commitment whatsoever in any jurisdiction. Investors should not subscribe for or purchase any
securities referred to in this announcement except on the basis of information contained in a prospectus in its final
form (the "Prospectus") that may be published by Fix Price Group Ltd (the "Company", and together with its subsidiaries
and subsidiary undertakings, the "Group" or "Fix Price") in due course in connection with the possible admission of
global depositary receipts representing its ordinary shares to the standard listing segment of the Official List of the
Financial Conduct Authority (the "FCA") and to trading on the main market of London Stock Exchange plc (the "London
Stock Exchange"). A copy of any Prospectus published by the Company will, if published, be available for inspection
from the Company's registered office at Commerce House, Wickhams Cay I, P.O. Box 3140, Road Town, Tortola, VG1110,
British Virgin Islands and on the Company's website at https://ir.fix-price.com/.
22 February 2021
Fix Price confirms intention to float on Main Market of London Stock Exchange
Following its announcement on 15 February 2021 regarding the publication of a Registration Document, Fix Price, one of
the leading variety value retailers globally and the largest in Russia, today confirms its intention to proceed with an
initial public offering (the "IPO" or the "Offer") and provides certain details of the Offer.
Fix Price confirms its intention to apply for admission of global depositary receipts representing its ordinary shares
(the "GDRs") to the standard listing segment of the Official List of the FCA and to trading on the London Stock
Exchange's main market for listed securities ("LSE Admission") and on Moscow Exchange (together, "Admission").
The final offer price in respect of the Offer (the "Offer Price") will be determined following a book-building process.
LSE Admission is currently expected to occur in March 2021.
The Company is planning to implement certain changes to its corporate governance structure in order to align with best
international practices. As part of this, Fix Price today also announces the expected appointment of three independent
non-executive directors (the "Independent Directors") to the Board of Directors to be formed following completion of
the IPO. In line with best international corporate governance practices, the Independent Directors are expected to
chair the committees of the Board of Directors. Biographies of the new Independent Directors can be found below.
Dmitry Kirsanov, CEO of Fix Price, said:
"We are pleased to confirm our previously announced intention to proceed with the IPO of Fix Price. Since day one we
have built Fix Price with the intention of becoming a public company, with a business model that taps into the
structural shift in consumer behaviour towards value and performs robustly throughout the economic cycle,
state-of-the-art operational and IT infrastructure, a highly professional team, and high business standards and
transparency.
"We believe that the proposed appointment of three Independent Directors will strengthen our governance structure and
underscore our commitment to high standards of corporate governance. Between them, the proposed Independent Directors
bring a combination of unrivalled track records as senior executives and board members of listed companies, and a deep
understanding of the retail industry. Fix Price will benefit greatly from their knowledge and expertise."
Confirmation of Offer Details
- The Offer consists of an offering of GDRs by certain existing shareholders of the Company (together, the "Selling
Shareholders"). The Selling Shareholders comprise (i) Luncor Overseas S.A. (an investment vehicle owned by one of
the Company's founders, Artem Khachatryan) ("Luncor"); (ii) LF Group DMCC (an investment vehicle owned by one of
the Company's founders, Sergey Lomakin); (iii) Samonico Holdings Ltd (an investment vehicle of Marathon Group); and
(iv) GLQ International Holdings Ltd (an indirect wholly owned subsidiary of The Goldman Sachs Group, Inc.). In
addition, Luncor intends to sell certain GDRs on behalf of certain members of the Company's senior management and
other minority shareholders, to allow such persons to monetise some of their shareholding. The founding
shareholders will retain a significant interest in the Company post-IPO.
- The Offer will comprise an offering to institutional investors outside the United States pursuant to Regulation S
and to Qualified Institutional Buyers in the United States pursuant to Rule 144A under the United States Securities
Act of 1933 (the "Securities Act").
- The GDRs will be admitted to the standard listing segment of the Official List of the FCA and to trading on the
main market for listed securities of the London Stock Exchange, with a secondary listing on Moscow Exchange.
- In connection with the Offer, each of the Company, its senior management of the Group and Selling Shareholders are
expected to agree to lock-up arrangements restricting the disposal of the Company's securities for a period of time
following Admission.
- Certain Selling Shareholders intend to grant an over-allotment option for up to a maximum of 15% of the total
number of GDRs being sold in the Offer.
- BofA Securities, Citigroup, J.P. Morgan, Morgan Stanley and VTB Capital (each as defined below) have been engaged
by the Company to act as Joint Global Coordinators and Joint Bookrunners.
- Any additional details in relation to the Offer will be disclosed in the Prospectus.
Further information about the Independent Directors
Alexander Tynkovan will be appointed as an Independent Director of Fix Price with effect from LSE Admission. Mr.
Tynkovan is a prominent business leader in the Russian retail industry having founded M.Video, a leading consumer
electronics retailer in Russia, in 1993. Alexander remained the permanent CEO of the company until 2020, taking the
company public in 2007. Upon strategic sale of M.Video to Safmar Group, he became the President of M.Video and Member
of the Board, remaining in charge of merger with Eldorado and its integration into M.Video's omni-channel business
model. Currently Alexander remains the Member of the Board and Head of Strategy Committee of the M.Video-Eldorado
Group, fostering digitalization and growing online presence.
Elena Titova will be appointed as an Independent Director of Fix Price with effect from LSE Admission. Ms. Titova has
over 22 years of experience in investment banking. She is currently an independent member of the Supervisory Board of
the "Bank Otkritie Financial Corporation" (Public Joint-Stock Company), a member of the Supervisory Board of Bank
Trust, independent member of the Board of Directors of Qiwi Plc, and also a partner and chairperson of the Advisory
Board of ICONIC, a block-chain integrator. In 1998-2006 she headed the Moscow office of Goldman Sachs. In 2006 Ms.
Elena Titova joined Morgan Stanley in Moscow as Head of Investment Banking Division and then became a President and
General Director of Morgan Stanley Bank in Russia and a member of its Board of Directors. In 2012-2013 Ms. Titova was a
President and Chairperson of the Management Board of the Russian Regional Development Bank. In 2014-2018, Ms. Titova
was Chief Executive Officer of UBS Bank, Moscow, Russia, as well as a member of its Board of Directors, and Country
Head for Russia at UBS.
Gregor Mowat will be appointed as an Independent Director of Fix Price with effect from LSE Admission. Mr. Mowat spent
more than 20 years working in the audit and accounting profession, mainly with KPMG. In 2011, Mr. Mowat was appointed
CFO of KPMG in Russia and CIS, a role he held until 2016 and which required him to take responsibility for all the
support functions in a multijurisdictional professional services firm with 4,000 staff. In 2013, in addition to his CFO
responsibilities, Mr. Mowat was appointed Managing Partner of KPMG in Kazakhstan, growing the business significantly in
a challenging economic environment. After being part of the team that set up and implemented new corporate governance
rules for KPMG in Russia and CIS, including being a founding member of the Board of Partners, in 2016, Mr. Mowat joined
his family in the UK where he co-founded LOQBOX, a financial inclusion FinTech with a mission to end financial
exclusion globally. Mr. Mowat also serves on the board of directors, inter alia, at PJSC Magnit, PIK Group and AK BARS
Bank.
About Fix Price
- Fix Price is one of the leading variety value retailers globally and the largest in Russia, with more than 4,200
stores. Fix Price has grown rapidly in recent years, with revenue of RUB 190.1 billion, RUB 142.9 billion and RUB
108.7 billion for 2020, 2019 and 2018, respectively. Adjusted EBITDA for the same years was RUB 36.8 billion, RUB
27.2 billion and RUB 14.2 billion, respectively. Net income was RUB 17.6 billion, RUB 13.2 billion and RUB 9.1
billion, respectively, for the same years.
- Fix Price occupies a separate niche to traditional discounters. Fix Price's stores provide an affordable shopping
destination, offering customers a broad range of essential and unique products at multiple fixed price points, all
under RUB 250 (ca. USUSD3.40).
- Fix Price's pricing policy capitalises on a structural shift towards value among consumers worldwide, which Fix
Price believes allows it to benefit in almost any economic environment, most recently during the COVID-19 pandemic.
In 2020, Fix Price reported double-digit quarterly like-for-like sales growth every quarter and FY like-for-like
sales growth of 15.8%.
- The variety value retail market is one of the fastest-growing segments in Russian retail and is expected to triple
in size by 2027 with a CAGR of 16.9% for 2019-2027, according to an independent industry consultant report. The
market has more than doubled its size over the past five years, albeit still at a low base compared to other
countries, suggesting further significant potential for growth.
- In the Russian variety value retail market, Fix Price is the leader both by number of stores and revenue. According
to an independent industry consultant report, Fix Price was estimated to account for 93% of the Russian variety
value retail market by revenue in 2019, and had by far the largest number of stores among Russian variety value
retailers.
- Today there are more than 4,200 Fix Price stores primarily in Russia, as well as in neighbouring countries
(Belarus, Kazakhstan, Uzbekistan, Kyrgyzstan, Latvia and Georgia), all of them stocking approximately 1,800 SKUs
across around 20 product categories. In addition to its own private brands, Fix Price sells products from leading
global names and smaller local suppliers. Fix Price's wholesale operations service a number of franchisees
operating in Russia, Belarus, Georgia, Kazakhstan, Kyrgyzstan and Latvia.
- Fix Price has an efficient and easily scalable business model, which is underpinned by the following key pillars:
data-driven procurement, supplemented by streamlined centralised logistics, an efficient store management model,
and a highly experienced management team. State-of-the art IT solutions enable Fix Price to achieve a high degree
of automation across its operations.
Investment highlights
Fix Price benefits from a combination of competitive advantages that it believes have contributed to its success and
will continue to support its competitive position and business strategy going forward. These competitive advantages
include:
Leading market position in a highly attractive, large and growing market
- Fix Price was estimated to account for 93% of variety value retail sales in Russia in 2019, according to an
independent industry consultant report, making it 13 times larger than other players on the Russian variety value
retail market combined, and had by far the largest number of stores among Russian variety value retailers.
- Fix Price believes that it pioneered and scaled the variety value retail concept in Russia, and therefore has a
first-mover advantage, as a result of which it currently operates in a market that is characterised by significant
barriers to entry to new competitors.
- Fix Price's leading market position enables it to drive the development of the variety value retail market in
Russia and neighbouring countries, drawing upon a globally proven concept which has demonstrated significant growth
over the past decade.
- The Fix Price business proposition addresses a material and fast-growing market, which is underpinned by a sizeable
population of over 249 million (in Russia, other CIS countries, Georgia and Latvia - the geographies comprising Fix
Price's expansion focus).
- On the back of structural shift in consumer behaviour towards value, in 2017-2020, the Russian variety value retail
market, measured by sales, grew at a CAGR of 23%. Fix Price sees substantial further upside supported by the
significant level of under-penetration today.
A unique customer value proposition
- Fix Price offers its customers deep value across a diverse, unique and constantly renewed product assortment,
satisfying their needs for everyday essentials while providing an engaging "treasure hunt" experience. Fix Price's
loyalty card programme brings additional value to customers through a number of attractive benefits.
- The elements of this unique customer value proposition include:
- Deep value across a diverse product offering. Fix Price strives to offer outstanding value via an
uncompromising "every day low price" strategy across several highly competitive anchor price points, all under
RUB 250 (c. USUSD 3.40). As of 31 December 2020, c.80% of the Company's product assortment was priced under RUB
100 (c. USUSD 1.3). Fix Price sells a broad range of products across approximately 1,800 SKUs in approximately 20
different categories, including household goods, cosmetics and hygiene, stationery and books, clothes, toys,
household chemicals, as well as shelf-stable food and drinks. Fix Price maintains a diversified mix of own
private brands, branded and non-branded (no-name) products.
- Constant newness and rapid time to market. A continuously refreshed product offering is at the core of Fix
Price's assortment strategy. Fix Price launches 40 to 60 products every week, many of which are driven by
seasonal occasions and latest retail trends, with approximately 60% of assortment in SKU terms being rotated up
to six times per year. Fix Price's own private brands are developed in-house by dedicated procurement and
design teams that continuously monitor the market for best-selling goods, collaborating closely with Fix
Price's suppliers to deliver quality products at the right time, at strategic price points and with target
profitability.
- Convenient shopping experience and an exciting "treasure hunt". Fix Price seeks to open its stores in locations
it believes benefit from convenience of access and high traffic. Fix Price constantly renews its assortment to
create an element of discovery and "treasure hunt" experience for its customers. This encourages repeat visits
fuelled by the search for exciting novelties. According to a study by Marketing Agency Vector, a marketing
consultancy, Fix Price enjoys a high Net Promoter Score of 60%.
- Fast-growing loyalty programme with highly attractive benefits. Fix Price's "Bonus Card" loyalty programme has
approximately 12 million registered card holders. Approximately 36% of Fix Price's retail sales in 2020 were
generated from sales of products to Fix Price's loyalty programme card holders, creating a "win-win" for the
customers and Fix Price.
Operational excellence: standardisation, tech-enabled automation and agile sourcing
- Fix Price believes that its efficient operational model driven by lean decision making and nimble management
approach greatly benefits from standardisation of its store network, highly automated operations, centralised
logistics and efficient procurement as follows:
- Fully standardised leased store portfolio driving outstanding unit economics. Fix Price has standardised its
entire network of stores in terms of pricing, product assortment, product layout, equipment and marketing. Fix
Price believes that the standardisation of its stores drives value, convenience and a great experience for Fix
Price customers. At the same time, standardisation reduces the complexities of running Fix Price's vast store
portfolio, allows it to make efficient purchasing decisions and contributes to the efficiency of its
operations.
- Agile sourcing model and long-standing relationships with suppliers. Fix Price's efficient, agile and
streamlined sourcing model translates into the ability to offer a constantly changing and carefully crafted
product assortment, delivering deep value to its customers and strong margins to the business. Fix Price has
developed long-standing, direct and collaborative relationships with over 600 local and international
suppliers. Fix Price's procurement team works closely with these suppliers to continuously create new and
on-trend products to meet the evolving tastes and needs of its customers. Fix Price believes that the sheer
scale of its business and purchasing volumes make it a highly relevant partner to its suppliers.
- State-of-the-art IT infrastructure, translating into better decision-making and decreased costs. Since the
inception of Fix Price, its IT infrastructure has been designed for scale, and today supports all key facets of
decision-making within its business. The high degree of tech-enabled automation of store-level processes allows
Fix Price to effectively run the entire network as a single store and to further scale it without significant
expansion of HQ personnel or significant additional investments in IT infrastructure.
- Logistics infrastructure scaled for growth. The design of Fix Price's logistics infrastructure is highly
strategic in supporting a portfolio of more than 4,200 stores. Operating across 78 out of 85 regions in the
world's largest country by land size, Fix Price's logistical infrastructure is critical to the success of its
business model. As of 31 December 2020, Fix Price had eight distribution centres. Fix Price's logistics
infrastructure is nearly 100% centralised.
Leading financial KPIs among best-in-class peers
- Fix Price believes it enjoys leading revenue growth, profitability and ROIC levels among publicly traded variety
value retailers globally (namely, Dollar General, Dollar Tree, Five Below, Ollie's, Grocery Outlet, Dollarama, B&M
and Dino), based on their publicly reported financial information.
- Fix Price's outstanding revenue growth at a CAGR of 32.2% in the three years ended 31 December 2020 is driven by
both rapid network expansion, with more than 1,690 increase in store count over the period of three years since 31
December 2017 and robust like-for-like sales growth averaging 19.0% for the last 16 quarters ending 31 December
2020.
- A combination of high sales densities, low operating expenses and asset-light business model enables Fix Price to
achieve superior returns on capital, with a market leading ROIC among publicly traded variety value retailers
listed above of 98% in 2020 (estimated by reference to their publicly reported financial information).
Visionary management team - experienced, dedicated and incentivised
- Fix Price's visionary founders, Sergey Lomakin and Artem Khachatryan, who will also be on the Board of Directors at
the time of Admission, launched Fix Price in 2007 in order to create the largest retailer in the variety value
retail market. Having the benefit of substantial prior experience in discount and non-food retailers, they
channelled their passion of bringing the variety value retail concept to the Russian consumer to drive the rapid
growth of Fix Price over the past 13 years.
- The overwhelming majority of Fix Price's top executives started working together with Sergey Lomakin and Artem
Khachatryan at the initial stage of Fix Price's development in 2007-2009. The Fix Price management team, led by the
CEO, Dmitry Kirsanov, has multi-year experience in retail across a broad range of disciplines, including
merchandising, marketing, real estate, finance, store operations, supply chain management and information
technology.
Media enquiries
EM (communications advisor to Fix Price)
Denis Denisov Peter Morley Dmitry Zhadan
denisov@em-comms.com morley@em-comms.com zhadan@em-comms.com
+7 985 410 3544 +43 676 684 5252 +7 916 770 8909
Fix Price
pr@fix-price.ru
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Merrill Lynch International ("BofA Securities"), Morgan Stanley & Co. International plc ("Morgan Stanley"), VTB Capital
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The date of Admission may be influenced by a variety of factors which include market conditions. The Company may decide
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professional clients, as defined in U.K. MiFIR; and (ii) eligible for distribution through all distribution channels as
are permitted by U.K. MiFIR (the "U.K. Target Market Assessment"). Notwithstanding the U.K. Target Market Assessment,
distributors should note that: the price of the GDRs may decline and investors could lose all or part of their
investment; the GDRs offer no guaranteed income and no capital protection; and an investment in the GDRs is compatible
only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with
an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who
have sufficient resources to be able to bear any losses that may result therefrom. The U.K. Target Market Assessment is
without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the
Offering. Furthermore, it is noted that, notwithstanding the U.K. Target Market Assessment, BofA Securities, Citigroup,
J.P. Morgan, Morgan Stanley and VTB Capital will only procure investors who meet the criteria of professional clients
and eligible counterparties for the purposes of the U.K. MiFIR Product Governance Rules.
For the avoidance of doubt, the U.K. Target Market Assessment does not constitute: (a) an assessment of suitability or
appropriateness for the purposes of the U.K. MiFIR Product Governance Rules; or (b) a recommendation to any investor or
group of investors to invest in, or purchase, or take any other action whatsoever with respect to the GDRs.
Each distributor is responsible for undertaking its own target market assessment in respect of the GDRs and determining
appropriate distribution channels.
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Category Code: ITF
TIDM: FIXP
LEI Code: 549300EXJV1RPGZNH608
Sequence No.: 93989
EQS News ID: 1169883
End of Announcement EQS News Service
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(END) Dow Jones Newswires
February 22, 2021 02:00 ET (07:00 GMT)
© 2021 Dow Jones News
