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By John Helmer, Moscow

Dmitry Pumpyansky’s (lead images) TMK, Russia’s largest steel pipemaking company, has announced that it is withdrawing its initial public offering (IPO) of shares in its US subsidiary, which had been planned for later this month on the New York Stock Exchange.  The announcement has appeared in the western media, but not yet on the TMK website. TMK planned to retain 62% of the US company after the IPO; Pumpyansky controls 65% of TMK through a Cyprus offshore entity called TMK Steel Holding Ltd.  

TMK’s Houston-based subsidiary known as IPSCO issued this release on Thursday, Texas time. “IPSCO Tubulars Inc. (“IPSCO”) today announced that it has decided to postpone its proposed initial public offering of its shares of common stock due to adverse market conditions. ‘While we received significant interest from potential investors, the continued market and economic volatility are not optimal conditions for an initial public offering,’ said Piotr Galitzine, Chairman of the Board of Directors and Chief Executive Officer of IPSCO. ‘As a company, we’ve consistently made decisions in the best interests of our stockholders, employees and customers, and we will continue to do so.’”

Pumpyansky had been attempting to double his money. The attempt to spin off his American steel and pipemaking operations to American investors for a price approximately equal to the TMK group’s  market capitalization was promoted by US banks seeking to recover loans they had extended; and by Anatoly Chubais, long one of the US Government’s candidates to rule Russia instead of the Kremlin incumbents since 1999. Chubais runs the state holding Rusnano, which bought a 5.5% stake in TMK in 2015.

A Financial Times promo  for the share sale had announced on January 29: “A New York listing will allow the Russian-controlled pipemaker to strengthen its pitch as an American manufacturer that offers investors a pure bet on the health of the US oil and gas industry, while also allowing TMK to monetise its investment at a peak in the market.” The newspaper failed to read the IPO prospectus issued the same day.  Read that document here

After the brief IPO notice was posted last week, Reuters noted  the company “did not elaborate further.” The news agency added a comment from a Moscow analyst. “ ‘So far they have only postponed, not canceled it (the deal),’ BCS investment bank analyst Oleg Petropavlovskiy said. ‘Everything will depend on the state of the U.S. stock market. They can return with this deal if the volatility ends.’”

The cause of the collapse of Pumpyansky’s plan was interpreted in the stock markets as more than the market-wide  loss of stock value.  Those who saw  the news cut the London and Moscow share value of  TMK by almost 5% in Friday share trading.

FIVE-DAY SHARE PRICE MOVEMENT FOR TMK ON LONDON STOCK EXCHANGE

Source: http://quotes.wsj.com/RU/MISX/TRMK?mod=searchresults_companyquotes

At the same time, comparing TMK’s share price fall to that of its international pipemaker peers, Vallourec of France and Tenaris of Luxemburg, it is evident that all three lost value.  TMK, however, dropped more sharply on the disclosure of the IPO failure. 

TMK SHARE PRICE TRAJECTORY, COMPARED TO TENARIS AND VALLOUREC, FEBRUARY 1-10, 2018
 
KEY: blue=TMK; green=Tenaris; yellow=Vallourec.
Source:  https://markets.ft.com/data/equities/tearsheet/summary?s=TMKS:LSE

For the full story of Pumpyansky’s stratagem,  read this

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