TPG-Backed Lenta Eyes London Listing

The move could produce a rare success story for a U.S. buyout firms in Russia, giving TPG the opportunity to exit an investment it made in 2009. Most U.S. private equity firms have shied away from Russia due to concerns about corruption and a suspicion that the best deals go to favored oligarchs. TPG has not had an easy time with Lenta—it had a long running dispute with its founder, which ended in 2011.

An initial public offering of Lenta would be the biggest floatation of a Russian company since mobile operator MegaFon raised $1.7 billion in November. Planning for an IPO is in the very early stages and could take place in the first quarter of 2014, one source familiar with the situation said. A second source said it could be in the fourth quarter of 2013 or first quarter of 2014.

Two banking sources said the company could command a valuation of over $5 billion, meaning that selling a 20-25 percent stake could see it raise $1 billion to $1.25 billion. A third source familiar with the situation said a figure of around 1 billion pounds ($1.5 billion) was realistic. A separate banking source, however, said it would more likely raise around $700 million. Meetings with banks were held in late May, one of the sources said.

VTB, which owns more than 10 percent of Lenta, has previously said it wants to sell its holding in Lenta by 2015. TPG owns a majority stake although the precise figure has not been disclosed.

Lenta was not immediately available for comment. TPG and VTB declined to comment.