March 4, 2020 / 8:07 AM / a month ago

Russian pipe maker Chelpipe sets sight on exports, niche products

MOSCOW (Reuters) - Russian steel pipe producer Chelpipe (CHEP.MM), which is considering a share offering in Moscow, is focussing on increasing exports and investing in high-value added projects amid a competitive domestic market, its chief executive officer said in an interview.

An interior view shows Chelyabinsk Pipe Rolling Plant owned by ChelPipe Group in Chelyabinsk, Russia February 26, 2020. REUTERS/Maxim Shemetov

Chelpipe, controlled by Russian businessman Andrei Komarov, has hired banks to organize the potential share offering, sources told Reuters in February.

Chelpipe CEO Boris Kovalenkov told Reuters the company is looking at all possible options for financing its strategy, including tapping debt markets and selling shares.

“If market conditions will be advantageous, if it would be effective for the financing of our strategic plans, then we would consider the possibility of entering equity markets, among other options,” Kovalenkov told Reuters.

Chelpipe, like many other Russian companies, has a small free float - at 2.8% - a “technical listing” that is too small for the company to be considered a fully-fledged member of the stock exchange.

The company, which supplies 31% of the Russian market for large-diameter pipes and 18% of pipes for the local oil and gas industry, is interested in participating in pipe-laying projects globally, including in the Middle East and Africa, Kovalenkov said.

Chelpipe aims to have exports make up a quarter of its revenues by 2024, compared to 21% in 2018, Kovalenkov said. The company has not disclosed the data for 2019.

The company does not plan to expand its production capacity, saying such investments would put pressure on the domestic market, Kovalenkov said.

The Russian market for large diameter pipes has been oversupplied in the past five years, and many new Russian projects producing oil and gas pipes are due to come online soon.

Chelpipe will direct funds to growing its niche, high-value added segment, hoping to invest between 10 billion roubles and 30 billion roubles ($152 million-$455 million) before 2024.

Reporting by Anastasia Lyrchikova; writing by Polina Ivanova; editing by Polina Devitt and Subhranshu Sahu

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