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POST WAS ORIGINALLY PUBLISHED MAY 15, 2007
Russian IPOs – Review of 18th week of 2007
MICEX Success
Recently MICEX summarized the results for 2006 and some achievements for 2007. In 2006, the total volume of transactions on the MICEX in non-government securities, including operations in stocks, bonds and REPOs, grew 3.2 times and reached 20.38 trillion RUR ($ 754.9 billion ) against 6.40 trillion RUR ($ 225.6 billion) in 2005. The daily average volume of transactions in stock assets reached 82.5 RUR ($3.1 billion) a day. In January-March 2007, the volume of transactions in non-government securities on the MICEX SE reached 7.82 trillion RUR ($297.4 billion), 2.5 times more than in the Q1 2006, while the daily average volume of transactions reached 137.2 billion RUR ($5.2 billion). In 2006, efforts to organize IPOs on the stock market began to yield results with seven companies IPOs, including Rosneft, Severstal, OGK-5 and some other, which together raised about 350 billion RUR (over $13.2 billion). As of beginning of 2007 586 organizations provided access to trading for 265,000 investors (in 2006 134,000), including over 24,000 legal entities, over 230,000 individual investors, 2,000 non-residents and almost 8,000 institutional investors. In April 2007, the number of participants in trading reached 600 organizations which serve 326,000 clients. Of course, this not at all compared with the magnitude of NYSE or LSE, but we are quickly learning.
Recently MICEX summarized the results for 2006 and some achievements for 2007. In 2006, the total volume of transactions on the MICEX in non-government securities, including operations in stocks, bonds and REPOs, grew 3.2 times and reached 20.38 trillion RUR ($ 754.9 billion ) against 6.40 trillion RUR ($ 225.6 billion) in 2005. The daily average volume of transactions in stock assets reached 82.5 RUR ($3.1 billion) a day. In January-March 2007, the volume of transactions in non-government securities on the MICEX SE reached 7.82 trillion RUR ($297.4 billion), 2.5 times more than in the Q1 2006, while the daily average volume of transactions reached 137.2 billion RUR ($5.2 billion). In 2006, efforts to organize IPOs on the stock market began to yield results with seven companies IPOs, including Rosneft, Severstal, OGK-5 and some other, which together raised about 350 billion RUR (over $13.2 billion). As of beginning of 2007 586 organizations provided access to trading for 265,000 investors (in 2006 134,000), including over 24,000 legal entities, over 230,000 individual investors, 2,000 non-residents and almost 8,000 institutional investors. In April 2007, the number of participants in trading reached 600 organizations which serve 326,000 clients. Of course, this not at all compared with the magnitude of NYSE or LSE, but we are quickly learning.
OMX Aggressive Drive into Emerging Markets
OMX Group continues its program of increasing its presence in Europe. According to the top management of the Group currently it is already represented as owner of stock exchanges in 7 countries: Austria, Romania, Latvia, Lithuania, Estonia, Sweden and Finland. It was reported earlier about the effort in Russia. This week we learned about two new countries in the list – Armenia and Ukraine.
Following over a year long discussions, OMX Group has signed a letter of intent to acquire the Armenian Stock Exchange and the Central Depository of Armenia. “We believe that acquiring the Armenian Stock Exchange and Central Depository is an opportunity for OMX to leverage our experience from developing emerging markets in other countries. OMX will strengthen the Armenian securities market with the goal to enhance its efficiency, liquidity and visibility. Furthermore, OMX’s ambition is to use the Armenian case as a benchmark to enter other emerging capital markets,” says Magnus Böcker, CEO of OMX. OMX also spent another year of active actions in the Ukraine with the statement that OMX Group has enough money to buy out any trading floor in the country. Experts believe that OMX will very soon acquire Ukrainian Interbank Currency Exchange. I think as good promotional news for OMX is this week announcement by West Siberian Resources that its Swedish Depositary Receipts had been approved for trading on the Stockholm Stock Exchange, as promotion from the First North junior market.
Just for statistics purposes here is the data from PricewaterhouseCoopers “IPO Watch Europe Survey Q1 2007”. Here OMX is in Top-5 even in this quiet quarter of the year.
OMX Group continues its program of increasing its presence in Europe. According to the top management of the Group currently it is already represented as owner of stock exchanges in 7 countries: Austria, Romania, Latvia, Lithuania, Estonia, Sweden and Finland. It was reported earlier about the effort in Russia. This week we learned about two new countries in the list – Armenia and Ukraine.
Following over a year long discussions, OMX Group has signed a letter of intent to acquire the Armenian Stock Exchange and the Central Depository of Armenia. “We believe that acquiring the Armenian Stock Exchange and Central Depository is an opportunity for OMX to leverage our experience from developing emerging markets in other countries. OMX will strengthen the Armenian securities market with the goal to enhance its efficiency, liquidity and visibility. Furthermore, OMX’s ambition is to use the Armenian case as a benchmark to enter other emerging capital markets,” says Magnus Böcker, CEO of OMX. OMX also spent another year of active actions in the Ukraine with the statement that OMX Group has enough money to buy out any trading floor in the country. Experts believe that OMX will very soon acquire Ukrainian Interbank Currency Exchange. I think as good promotional news for OMX is this week announcement by West Siberian Resources that its Swedish Depositary Receipts had been approved for trading on the Stockholm Stock Exchange, as promotion from the First North junior market.
Just for statistics purposes here is the data from PricewaterhouseCoopers “IPO Watch Europe Survey Q1 2007”. Here OMX is in Top-5 even in this quiet quarter of the year.
And More Foreign Banks Into Russia….
This week we have heard some statements from the officials regarding increase of foreign banks’ participation in the Russian banking sector. Mr. Melikyan, First deputy of the Bank of Russia, thinks that by the end of 2007 the foreignres shall have about 5-6% increase in the share of Russian banking sector. This concurs with the recent statement of Alexey Kudrin, Minister of Finances that within the next 5-7 years there would be about 30-35% of foreign banks in the country. The Central Bank of Russia estimates that currently this number is near 12-13%. Last week I wrote about Toyota Bank coming to Moscow. This week there is another newcomer – French Auchan Group (that has a chain of hypermarkets in Russia) is planning to start activities this summer to establish a bank based on its subsidiary Banque Accord Group (BAG), which already maintains a small office in Moscow since 2005. Initially the new bank will service the companies (Auchan and Leroi Merlen chains) and after two years of regulatory period will switch to individuals. Interesting news was spilled out from the Duma, where one of the deputies reported about his recent discussions in Washington with Ford officials about their intentions to open the bank in Russia, although local Ford representatives deny this. This might be very true considering Toyota, BMW, etc. cases.
Football IPOs on the Horizon
There was a first of its kind analytic paper in the Russian sports daily newspaper that discussed possibilities of the popular Russian football teams for IPOs. I guess this was sparked by the successful IPO of France’s top football team Olympique Lyonnais Groupe SA on Eurolist (Euronext Paris) last April. The institutional offering was over-subscribed 6.5 times in and outside France and the French retail offering (10% of the initial offering) was covered 4.3 times. The €88m IPO (€102m in case of full exercise of the greenshoe) consisted in a capital increase to finance the building of a new 60,000-seater stadium. Of course we may remember also Juventus Football Club, Italy's richest and most successful team, had the biggest sports IPO this decade, raising $129 million in December 2001. Now we are contemplating on IPOs too with popular Russian football clubs like Spartak club, that already announced IPO plans way back in 2003, CSKA, or Dynamo.
New IPO Cnadidates
Kamskaya Dolina, devloper company from Perm – IPO in 2009-2010
Mosobltrustinvest, a financing arm of the Moscow Oblast (region) government - IPO in 2008
Irkutskenergo - considering IPO in two or three years
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