Russian gas giant SIBUR's capital markets debut

The new chief financial officer of Sibur, the largest gas processing and petrochemicals company in eastern Europe, has plenty of experience dealing with investment bankers — he used to be one. Pavel Malyi, formerly one of the leading rainmakers for UBS in Russia. left the bank in 2010.

Malyi is stepping up as finance director in June, combining his new role with his duties as a chairman of the firm's finance committee. In January, Sibur issued its first bond. a $1bn sub- investment grade transaction with a 3.9149 coupon, which was oversubscribed.

Financial News talked to Malyi about the issuance and the firm's future plans in the capital markets.

GT: How did you pick the banks you did?

PM: There was an extremely thorough selection process. We invited every bank you can imagine and, judging by the results of the transaction, we think the selection was pretty successful. I enjoyed working with all the teams.

GT: Who ended up buying into the bond?

PM: What is interesting is that the largest chunk of the deal ended up with ITS holders. For a five-year deal debuting out of Russia, you probably would expect a smaller allocation to the US. In my view, that is evidence of good demand and our investor story The strong US demand helped us with our pricing. The investors were mostly long-only institutions focusing on emerging markets, with a much smaller focus on the hedge fund and private bank community.

GT: Discussion about your potential flotation has been going on for some time, what is the latest?

PM: Discussion about our IPO has been mostly from the press. The answer is very simple. Some time ago, Leonid Mikhelson, our main shareholder, stated that over the medium term he would like to see our company go public. It is ultimately up to our main shareholders as to when they should proceed with the IPO. Our main task as management is to make sure the company is well run.

GT: You like building your own projects rather than expanding through acquisition. But has M&A crossed your mind at all?

PM: It is a good question. Fundamentally we think the most efficient allocation of our capital is through greenfield or brownfield upgrades of our own facilities. Sibur traditionally hasn't done much M&A for the simple reason that there haven't been enough attractive targets. But every once in a while we do reasonably small- scale deals. In 2011 we exited our tyre business and our mineral fertiliser business. I like the shape of the company as it is now. I don't see any need for any major rearrangements. We may, if it is deemed efficient, exit some less significant areas of our business but that would only be minor stuff.

GT: Although you have just completed your bond issuance, are you going to enter the capital markets again anytime soon?

PM: There is no immediate need. If I was going to characterise our position in the capital markets, we will be a regular but not necessarily a frequent issuer.