RUSSIAN IPOs – REVIEW OF 14TH WEEK OF 2007

THIS POST WAS ORIGINALLY PUBLISHED APRIL 06, 2007

 RUSSIAN IPOs – REVIEW OF 14TH WEEK OF 2007

This week we heard a lot of discussions regarding the roles and place of the centers of investment activities in the world. I guess this was started March 29 with the two managers of International Capital Strategies piece in the The Wall Street Journal titled “Capital Warfare”. There are some notable observations there:

- “A recent survey of financial professionals found almost two-thirds believed that London would consolidate its position as the global center of finance by 2015, 13% predicted Dubai, 10% pointed to Shanghai and fewer than one in ten gave a nod to New York. The U.S.-led unipolar financial era appears to be slipping away.”
- U.S.A. faces stiff competition as an investment destination from resource-rich developing countries. “While the embrace of markets and capitalism by countries like China, Russia and even Vietnam represents a long-sought triumph over communism, the U.S. must nevertheless recognize the ancillary consequences of this victory. We now have to compete with them”
- Russia raised enormous sums without directly accessing U.S. markets or investors (ROSNEFT and SBERBANK)

Next, on Monday we read FT and find out that Europe has eclipsed the US in stock market value for the first time since the first world war. Europe’s 24 stock markets, including Russia and emerging Europe, saw their capitalization rise to $15,720 billion, as compared with the $15,640 billion market value of the US. Sure enough we hear the angry NYSE chief dismissing everyone, but his business. While at the same time in Moscow both LSE and MICEX hosted a significant event where we have heard very nice words from British financial people. Today these nice words are a tad dissolved with a sour note as Robert Amsterdam (a current lawyer for Mikhail Khodorkovsky) puts it: “London Feeling the Heat on its Lax Rules for Russian IPOs”.

Meanwhile we have heard about some positive things too:
- Goldman Sachs is considering stepping up its operations in Russia
- EBRD is expanding its operations in Siberia with planned opening of its representation office.
- Baring Vostok Capital launched a new private equity investment fund worth $1billion, which will focus on investments in Russia, Ukraine and Kazakhstan.
- Shinhan Bank, the second largest bank in South Korea, is hunting for a suitable acquisition target in Russia.
- Generali Group, the fourth largest insurer in Europe, entered the Russian market.
- Discussions are being held with U.A.E.'s Dubai Ports World regarding its investment in the development of special economic zones at Russian ports.
- Two European investment funds - Index Ventures (Switzerland) and Holtzbrinck Ventures (Germany) - and Cisco Systems have agreed on an $18 million investment into Ozon.ru, a Russian analogue of Amazon.com. The stake acquired is reportedly in the range of 20%-30%.

IPO Candidates and NOT

- Both MICEX and RTS announced their listing plans
- Zenit Bank - IPO in 2007

- UNISTREAM, a wire transfer bank – IPO in 2008
- ALTIMO telecommunications holding – possible IPO on LSE
- SOVCOMFLOT ship company – up to 20% placement in IPO in 2007
- RENOVA MEDIA HOLDING – IPO in London or Amsterdam at the end of 2008
- PIK GROUP, real estate developer – IPO in London and Moscow – May 2007
- Timber Group Limited, formerly Tynda Forest Holdings Limited, - IPO in London
- Power Machines, the largest engineering group -IPO in the second half of 2007
- RUSSIAN MEDIA GROUP, a holding of radio stations – IPO in 2010
- MODNYJ KONINENT, retail chain of high fashion – IPO in 2009
- Transaero airlines - IPO in 2008.