THIS
POST WAS ORIGINALLY PUBLISHED JUNE 03, 2007
Russian IPOs – review of 22nd Week of 2007
Russian Stock Market Booms
Alexy
Kudrin, Russian Finance Minister, speaking at the Duma hearings noted
that the Russian stock market is rapidly moving ahead. Capitalization of
Russian companies is over $ 1 trillion; and Russia is No.13 in the
world as to market capitalization. About 70 companies are planning IPOs
this year. This week was historic for RTS. For the first time there was
transaction of its equity on RTS.
Although it was the only one – 100 shares at the price of $300 each – it
showed the company’s market cap – about $ 480 million.
Deutsche Boerse Enters the Race
The
first representation office for the foreign stock exchange was opened
this week in Moscow. Deutsche Boerse set up services of events in Moscow
to commemorate this opening with a big crowd of Germans that included the Mayor of Frankfurt,
top managers of Deutsche Boerse Group and some big German banks. One of
the goals is expansion of service for a growing number of local
customers and to maintain contact with Russian authorities and capital
market institutions. The German financial institutions are very visible
in Russia (as I mentioned in my last post) and Deutsche Boerse did sign MOU with MICEX last year. Russian press noted that by enhancing its presence in Moscow Deutsche Boerse is expected to provide competition to Russian stock market, and LSE.
There are currently 56 Russian companies listed at the exchange, and
one of the officials told the press that Deutsche Boerse is now in
discussions on IPOs with some companies from oil and gas, pharmacy, energy, innovation technology and biotechnology sectors. Arrival of Deutsche Boerse is at interesting time here. We are all closely watching the story of NASDAQ/OMX and their entrance to Russia through IXSP. Another issue is the tightening to LSE’s listing rules. So, while these things are developing, Deutsche Boerse is already in Moscow. One of the notable facts that the KOMMERSANT DAILY published a big review “IPO Breakthrough // Western Traders Begin Jockeying for Russian Issuers” that, I guess, is worth reading. However, this analysis fails to include some other players that are active here too: Euronext, Hong Kong Exchanges, Singapore.
ROSTELECOM – NYSE Delisting
One of the most discussed issues this week was the intention of ROSTELECOM to delist its ADRs
from NYSE. This is the second Russian company (the first was TATNEFT)
to delist and according to the company’s spokesman, the decision is to
be made this month. There are several reasons to this decision, but the
analysts point to two major ones:
After
liberalization of the Russian Telecommunications Market ROSTELECOM is
faced with the necessity of thorough audit of its all structure up to
the end-user companies. This is the result of Sarbanes-Oxley Act (SOA) and sure enough brings a good deal of added costs. (One
of the KOMMERSAND DAILY’s newsmen wrote this week that during the
Russian Corporate Governmamnce Conference in the USA last May Paul
Sarbanes was very cheerful and happy waiving with the copy of SOA pages –
Russian companies are not happy at all).
The
other reason is that there are virtually no ROSTELECOM’s ADRs trading
on NYSE. According to the company’s press service there are about 5.2%
of company’s equity trading. In the recent year investment funds bought
about 35% of the company’s stock; major trading transactions are on
MICEX.
However, other Russian telecoms that are present at NYSE have no intentions to delist.
Investing in Russian IT Sector
In the past months we do feel that there is an increasing sentiment towards Russian venture financing. Der Spiegel printed a report “Tech Startups Come of Age”, another announcement was that the Luxembourgian venture fund Mangrove Capital Partners and the Russian ABRT are announcing a joint investment program in Russian IT startup companies. And this week I had an extensive discussion with the Chief of Business Week Moscow Bureau about financing in Russian venture companies. As I mentioned earlier FINAM INVESTMENT COMPANY is offering some Russian IT assets on MICEX. We are talking about selling equity stakes of Finam-IT mutual fund. In fact we are not so much looking for the money, rather to test waters with investment community. As Demosthenes, the famous Greek statesman said: “Small opportunities are often the beginning of great enterprises.”
One interesting observation about investors’ attitude.
We are now in a very active stage of our road-show (in very close
collaboration with MICEX – we are the first issuer to be listed in its Innovative and Growth Sector). There is a strong differentiation among the investor community.
Investors that are present in Russia are really enthusiastic and we
have a good response. However, here is very limited interest from groups
in London, and sometimes I got rather rude replies when I introduced myself as a Russian.
Next week we are in London, and we will try to talk to some people in
person and see any interest. I discussed this with a top manager of Renaissance Capital
and he told me that these people are really unaware of what is going on
in Russia right now and they do miss opportunity. When they will
realize it – it is gone.
Russian Fuel & Energy Commodity Exchange
It is expected that at the XI Saint Petersburg International Economic Forum an MOU with NYMEX shall be signed to establish a Russian Fuel & Energy Commodity Exchange. This
shall ne a non-commercial partnership that will be involved in trading
of the Russian oil. It is expected that by the end of the year the first
REBCO oil trading will take place. The Exchange is being created under
the auspices of Minister of Economic Development and Trade of the Russian Federation and Central Bank of Russia.
NISSAN and GM to Open Plants in St.Petersburg Area
It
was announced that Nissan is planning to commence operations of its
plan in Russia by the end of 2009. This is continuation of an earlier signed program; initially only one model shall be assembled for sales in Russia, but some export options are being considered too. General Motors will start operation of its third plant in November 2008 ; its
$115 million worth plant will produce the Chevrolet Captiva sports
utility vehicles and a yet-to-be-named compact car from October 2008,
with total annual capacity of 60,000.
New IPO Candidates
- CIT Finance Bank – MICEX listing next summer
- TransCreditBank – IPO within 2007-2010
- Bank “Saint Petersburg” – possible Russian IPO within a year.
- Corbina Telecom - up to 25% of its stock through an IPO in Moscow, London or New York in late 2008.
- Kaspersky Lab – possible IPO within two years
- North West Oil Group – possible IPO on NASDAQ, AMEX or AIM
- Conversbank Financial Group – its member bank INVESTBANK is planning IPO in neaqrest years
- POLYUS GEOLOGORAZVEDKA, of POLYUZ GOLD – a newly established company will be preparing for IPO
- The Rosweb group of companies – IPO at the end of 2008.
- United Aircraft Building Corporation – IPO in 2009-2010
The List of Latest Russian IPOs
Exchange
|
Currency
|
IPO Date
|
Price at date of IPO
|
Price as of May 31, 2007
|
Change
| |
RTS
|
USD
|
05/22/07
|
2.300
|
2.380
|
+3.48
| |
RTS
|
USD
|
05/18/07
|
14.400
|
14.300
|
-0.69
| |
VTB additional
|
MICEX
|
RUR
|
05/14/07
|
0.136
|
0.145
|
+6.47
|
RTS
|
USD
|
05/03/07
|
58.200
|
63.570
|
+9.54
| |
RTS
|
USD
|
04/27/07
|
53.000
|
49.250
|
-7.08
| |
AIM
|
GBP
|
04/25/07
|
299.000
|
300.000
|
+0.33
| |
MICEX
|
RUR
|
02/22/07
|
89,0000
|
91,800
|
+3.15
| |
INTEGRA (GDRs)
|
LSE
|
USD
|
02/21/07
|
16.755
|
18.250
|
+8.96
|
LSE
|
USD
|
02/07/07
|
7.750
|
5.750
|
-25.81
| |
SITRONCS (GDRs)
|
LSE
|
USD
|
02/07/07
|
12.00
|
8.400
|
-30.00
|
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