EXCLUSIVE-Russia's Lenta picks banks for possible IPO-sources
* IPO could value company around $5 billion - sources
* Could raise at least $1 billion - sources
* Russian retail stocks trade at premium to market
(Adds comment about how an IPO may be received)
MOSCOW, June 13 (Reuters) - Russian hypermarket chain Lenta, part-owned by U.S. private equity firm TPG and Russia's VTB Capital, has selected banks for a possible initial public offering (IPO) next year, two sources familiar with the situation said.
The banks chosen are JP Morgan Chase & Co, Credit Suisse, UBS, Deutsche Bank and VTB, the sources said.
Fast-growing retail and consumer stocks have been among the few bright sparks of the Russian market this year and a stock market listing could play well with fund managers looking for a way to profit from the country's growing middle class.
Russia's MICEX consumer index has risen 11 percent this year, versus a 13 percent fall in the broad MICEX, with food retailer Magnit a popular pick that trades at a hefty premium to the deeply discounted Russian market.
"(Lenta) is well run, with good margins and it's slap bang in the middle of the emerging markets consumer theme which is a global theme," said one trader. "It also plays into the non-Russian state-run businesses theme, which active fund managers of Russian portfolios are keen on."
BILLION DOLLAR BABY
Sources familiar with the matter had said that Lenta was talking to banks about a possible London listing which could raise at least $1 billion and could command a valuation of over $5 billion.
The move could also produce a rare success story for a U.S. buyout firm 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 favoured oligarchs.
TPG has not had an easy time with Lenta - it had a long running dispute with its founder which only ended in 2011.
"In general I think it will be taken positively that TPG brought Western-style rigour to how the business is run," said the trader.
Fund managers may look to buy into Lenta as a possible takeover play, said the trader. U.S. giant Wal-Mart has considered entering Russia in the past but not committed to the market.
An IPO of Lenta would be the biggest market debut of a Russian company since mobile operator MegaFon raised $1.7 billion in November.
The London Stock Exchange has attracted a flurry of new listings this year encouraged by rising share prices.
Last week British life insurer Partnership Assurance Group made a strong London market debut, opening 17 percent above its listing price following an offering which was more 10 times oversubscribed. 1/8ID: nL5N0EJ0FK 3/8
Lenta declined to comment. TPG, JP Morgan, Credit Suisse and VTB declined to comment. UBS and Deutsche did not immediately provide comment.
(Reporting by Megan Davies; Additional reporting by Olga Popova and Maria Kiselyova in Moscow and Kylie MacLellan in London; Editing by Douglas Busvine and Erica Billingham)