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Telegram's chances on IPO

Telegram is conducting a new $750 million bond offering, sources say, the additional issue of securities is aimed at Western and Asian demand.

Telegram Group Inc., which owns the messenger Telegram, is conducting a new offering of bonds worth $750 million, sources told Vedomosti newspaper.

On April 28, the organizers of the offering closed the order book, the securities will enter circulation in the market on May 6, the publication writes with reference to a closed Bloomberg newsletter for investors. RBC's source in the financial market has also confirmed that he has received an offer to buy Telegram's Eurobonds.

RBC has sent an inquiry to Telegram.

Telegram has already placed Eurobonds for $1 billion in March.

The minimum lot for participation then was $500 thousand, the par value of one paper was $1 thousand.

Bonds were placed till 2026, the first coupon payment is planned for September 2021. The coupon rate is 7% per annum. According to the Vedomosti, the parameters of the new issue will be the same as in March. Initially, the company planned to place bonds for another $500 mln, Vedomosti wrote referring to the message sent by the Aton investment company to potential buyers. However, later on it was decided to increase the amount to $750 mln, according to the source of the newspaper, close to the organizers of the placement. RBC sent inquiries to the press service of VTB and Aton, which had participated in the organization of the previous $1 billion bond placement of Telegram, according to the Vedomosti interlocutor, the additional bond issue is intended for international investors. Thus, 50% of bonds will be bought by Asian funds, 40% will be bought by large global institutional funds, and another 10% will be bought by Russian companies. Another source specifies that the share of Russian investors will be 10-15%. "When planning this issue, [Telegram founder Pavel] Durov initially focused on Western and Asian demand," he said.

The company decided to conduct an additional issue after it realized that it would not have time to arrange deals with some of the large funds from Asia within the framework of the March bond issue, the publication source said.

Telegram's decision to finish the issue is quite logical and justified, Deputy Director of UFG Wealth Management Investment Department Evgeny Pundrovsky told RBC. "Obviously, the demand for Telegram bonds was not satisfied at the first offering. A lower minimum lot of $100 thousand allowed to attract a wider range of investors and, consequently, additional investments," he explained. The additional $750 million "will allow to ensure smooth operation of the company for further monetization and potential IPO," Pundrovsky added.

If Telegram holds an IPO, buyers of bonds will be able to convert them into company shares with a 10-20% discount to the market value, according to Aton's report. A 10% discount to the offering price is envisaged if Telegram goes public within the first three years of the bond issue. In 2025, it will increase to 15%, in 2026 - to 20%.According to Vedomosti sources, Telegram has already started preparations for the IPO, it may take place in 2023. The messenger is choosing the region and stock exchanges for the offering. In addition to the IPO, it is also considering options for a direct listing and the use of a SPAC-company to go public, the publication's interlocutors said.

According to estimates cited by the publication, during the initial public offering Telegram may be valued at $30-50 billion.

Consultants suggest tying the valuation of the company to the monthly number of active Telegram users and proceed from the estimate of one at $50, said the source close to the messenger team.

Telegram may choose one of the Asian stock exchange platforms for placement. A source close to the messenger team explained this by the fact that today more than 40% of Telegram users are in Asia, and in two years this figure may grow to 50%. The Vedomosti's source close to the auditor says that at this stage Telegram is choosing between New York's NASDAQ and the Hong Kong Stock Exchange.

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Nadezhda Ulyanova

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