Investment group ups stake in Kalina

By Simon Pitman

- Last updated on GMT

Related tags Investment

Morgan Stanley Investment Management has taken a 1.75 per cent
stake in Kalina, following a period of growth and acquisitions for
the Russian cosmetics giant.

According to financial press reports, Morgan Stanley made the investment in depositary receipts back in Q3 2005. This ups the group's stake in Kalina to a total of 2.52 per cent.

With shares on the due to the Morgan Stanley investment as well as a continued strong financial performance, the investment group's stake in the company is currently estimated to be valued in excess of $10 million.

According to market information, Morgan Stanley is currently the only institutional investor with more than a 0.5 per cent market share in the company. The second largest stake is owned by the fund Fidelity Management and Research, which holds a 0.49 per cent share.

Morgan Stanley's increased investment in Kalina is considered to be a clear sign of growing confidence in both the current performance of the company and its prospects for the future.

The Russian market for cosmetics is currently growing at well into double figures, and that growth is expected to continue well into the future if economic stability is sustained. Currently the market for cosmetics in Russia is estimated to be valued at $6.2 billion and Euromonitor estimates that the value could grow by 60 per cent in the next 5 years.

Kalina is the largest supplier in the Russian market for the skin care, oral care and hair care categories and has a distribution network that touches on 23,000 outlets throughout the country. In recent years it has achieved sales growth that has topped 30 per cent.

At the beginning of last year Kalina bought up German personal care manufacturer Dr. Scheller, an investment that led to a big turn-around in the company's financial fortunes, helping it to edge its way out of losses incurred in previous years.

Main product areas include skin care, oral care, hair care, baby care, fragrances and male grooming. The company's sales grew at a rate of 30 per cent between 2002 and 2003 and in 2004 net profits topped $10 million. Currently it has a 34 per cent share of the Russian skin care market and a 15.8 per cent share of the oral hygiene market.

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