"If up to 25 percent of old shares are offered for sale, at least 150 million litas will likely be raised, which is not a very small deal on Warsaw bourse at a time when investors (on WSE) are much more cautious than previously and when holding an IPO is much more difficult," Tadas Povilauskas, a Finasta analyst, told BNS.
The analyst said that he is somewhat worried that Alior Bank's IPO at the end of the year - Poland's biggest IPO this year - may overshadow Inter RAO Lietuva's offering.
Inter RAO Lietuva, which is Lithuania's largest electricity supplier, will be marketed to investors as a company operating in a stable sector and posting high net earnings. Therefore, its shares are unlikely to be priced low, Povilauskas said.
"So, given that Inter RAO Lietuva's net profit will come in at around 60 million litas for the third year, the shares are likely to be valued at no less than 600 million litas - at 10 P/E (price-to-earnings ratio) - or even higher," Povilauskas said.
"All the more so because the company pays out all of its net profits as dividends. If they said that dividend payments will remain similar in the future and that the company will not need to make any major investments, that would be a very interesting offer to investors, because many would probably find a dividend yield at 10 percent attractive," he said.
However, the analyst noted that there are many risks due to the company's links to Russia.
"This will somewhat hold back more conservative investors fearing to be in the ranks of shareholders alongside Russia's Inter RAO," he said.
The central Bank of Lithuania on Monday received Inter RAO Lietuva's IPO prospectus and has 20 work days to analyze the document.
Inter RAO Lietuva said in a news release to the Polish media that the financial brokerage company Orion Securities is arranging the IPO and the international business law firm Baker & McKenzie is providing legal services.
Lithuania's investment company Scaent Baltic holds a 49 percent stake in Inter RAO Lietuva, and RAO Nordic, a company controlled by Russia's state-owned power export and import monopoly Inter RAO, owns the remaining 51 percent.