Russia on track for bumper year of share sales as local IPOs may exceed $10bn
Russia has an active retail buyer base, which boosted trading volume during lockdowns, so companies are not taking their IPOs overseas
Moscow — Russia is on track for a blockbuster year of share sales, led by gold miners, e-commerce companies, and other firms emerging stronger from the pandemic.
Initial and secondary public offerings by Russian companies on domestic and foreign exchanges could exceed $10bn in 2021, according to Alex Metherell, co-head of global banking at VTB Capital, the investment-banking arm of Russia’s second-biggest lender. That would be the strongest showing in at least eight years, Dealogic data show.
For now, markets are awash with stimulus, tempting local companies to join the global initial public offering (IPO) rush after Russia’s benchmark MOEX stock index hit a record high in January. That could change if opposition leader Alexei Navalny’s arrest and imprisonment triggers tougher sanctions from the US and Europe, but some investors are betting fresh penalties wouldn’t be severe enough to rattle markets.
“A lot of the companies planning equity offerings benefited from the pandemic, and their value increased,” said Fedor Tregubenko, UBS Group’s Russia chair. “Financial markets had a large liquidity boost in 2020, so there is demand for new investments.”
Fix Price, Russia’s biggest dollar-store retailer, announced plans this week to sell shares in an IPO in London. Online retailer Ozon Holdings’ $1.27bn listing in November was the best market debut for a Russian company since 2011.
At least two Russian gold miners are looking to cash in on booming prices of the metal, which reached new highs in 2020 as the pandemic crippled global economies. Nord Gold said in January that it’s evaluating strategic options, including a potential IPO in London, while BlackRock-backed GV Gold is said to target a valuation of more than $1bn in a Moscow listing.
“Some inevitable postponements and delays triggered by the Covid-19 interruptions have meant that 2021 is looking particularly enticing for the quality and mix of the IPO pipeline,” Metherell said.
Russia is home to an active retail buyer base, which boosted trading volume in the country during coronavirus lockdowns. This has contributed to companies considering an IPO at home rather than taking their deals to London or New York, according to Dmitry Brodsky, Renaissance Capital’s head of equity capital markets for Russia and the Commonwealth of Independent States (CIS).
“We can see considerable pools of liquidity moving from London to Moscow, additionally propped up by a strong growth in Russian retail investors’ activity,” he said.
Russia was once a major source of equity sales in Europe, and companies raised more than $31bn from stock placements in 2007, according to data compiled by Bloomberg. But offerings dwindled in the past decade as Russia’s annexation of Crimea in 2014 and the attempted assassination of a former spy four years later in the UK triggered waves of sanctions.
As the coronavirus spread in 2020, tumbling prices of oil stifled the Russian market.
“The success of the first wave of IPOs before summer will help shape the second half of the year,” said Irackly Mtibelishvily, chair of corporate and investment banking at Citi Central and Eastern Europe, Middle East and Africa.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.