Russian Supermarket Chain VkusVill Plans IPO In New York

VkusVill, a fast growing Russian supermarket chain, is planning an initial public offering (IPO) in New York and expansion overseas, targeting markets in Europe and China.

Founder Andrey Krivenko told Reuters that VkusVill, which positions itself as a technology-focused company as well as a supermarket with around 1,000 stores in central Russia, is looking at a share listing on New York’s Nasdaq.

With annual revenue growth of 60%, VkusVill could become the first Russian food retailer to go public since 2014 when hypermarket chain Lenta listed in London. After an initial spike, Lenta shares have lost two-thirds of their value.

A source close to Russian private equity fund Baring Vostok, which holds a 12% stake in VkusVill, said the IPO may happen in early 2021. The remaining 88% is held by Krivenko and the management of VkusVill.

VkusVill has not made a final decision on its IPO plans, Baring Vostok said in an emailed comment.

Krivenko said the plans were still being developed and that VkusVill would also consider listing in Moscow. He did not say if the company was particularly interested in a double listing.

Niche

VkusVill, which buys food from producers directly and spends no money on advertising, opens an average of two stores daily and has found a niche in Russia, modeling itself on best practice at U.S. chain Trader Joe’s, Germany’s Aldi as well as British supermarket groups Tesco and Waitrose, Krivenko said.

“What we have done is the result of hundreds of experiments,” he said. “We don’t feel like we are competing with others.”

VkusVill, which roughly translates as “Taste Town”, would also like to expand abroad.

“We are developing the VkusVill project in Paris, we will turn up there in the near future… maybe next year,” said Krivenko.

“It’s an experiment for us. They (the French) have the same problem: the old-fashioned retail business is not really adjusting to current needs.”

VkusVill is also looking at the Netherlands and China.

Opportunities

Krivenko opened his first kiosks selling fresh dairy products in 2009 without borrowing from banks. Ten years on, the company still has no loans and no intention of taking any out, or tapping the bond market, despite growth plans.

It plans to open bigger stores in Moscow with a wider product range, including wines, and a cafeteria.

More than 90% of its food products are made in Russia and therefore insulated from rouble rate swings. But wines in VkusVill will be of foreign origin, Krivenko said.

VkusVill is also working on diversifying its sales pipelines.

The company has launched self-check-in mini-stores in Moscow offices and is planning to develop a catering business.

Reuters