Russian oil and gas pipemaker TMK halts $615m IPO of US unit

Russia's largest oil and gas pipemaker has abandoned plans for a $615m initial public offering of its US subsidiary, blaming market volatility.

TMK, controlled by billionaire Dmitry Pumpyansky, announced late on Thursday that it would postpone the IPO of Ipsco, which it had announced only a week-and-a-half earlier.

“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, chief executive and chairman 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.”

Shares in TMK fell 3.8 per cent in afternoon Moscow trading.

Oleg Petropavlovsky, a metals analyst at Moscow brokerage BCS, said in a note: “In our view, [the] IPO was almost fully priced in and delay or even probable cancellation should lead to 10 per cent-plus decline in [the] company’s value,” 

TMK’s announcement came after Wall Street posted steep losses on Thursday. A 3.8 per cent drop in the S&P 500 pushed the benchmark index to a 10 per cent decline from its January high — the technical definition of a correction.

Ipsco, which TMK formed from assets acquired in 2008 and 2009 for about $1.7bn, has benefited from the surge in US shale oil exploration and production in recent years. The US unit saw production almost double in 2017 from a year previously, and accounted for almost all of the Russian group’s production growth last year. 

TMK had said that it would use the proceeds from the IPO to pay down debt while retaining a controlling stake in Ipsco. 

Mr Pumpyansky was last week named on the US Treasury’s “oligarch list” of Russia's most influential billionaires, only hours after announcing the IPO plans. Neither Mr Pumpyansky nor TMK are subject to US or EU sanctions.