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Russian companies traditionally prefer LSE


PwC has prepared another overview of the European capital markets for Q1 2012. After a long period of uncertainty, volatility and shelved floats, the IPO market is slowly starting to fight its way back to health, with average transaction values on the rise. 58 IPOs raised EUR 2.3 bn in the first quarter of 2012.

The main board of the London Stock Exchanges remains a traditional venue for high profile IPOs. In Q1 2012 LSE hosted 3 out of the 5 largest IPOs completed that quarter. It should be noted that those five largest IPOs included Ruspetro, a Russia-based oil & gas company. Q1 2012 was essentially a repeat of Q1 2011 when LSE was the venue for 3 of the 5 largest IPOs then completed and when HYDROMASHSERVICE, a mechanical engineering company, was another Russian issuer among the top five IPOs.

Russian IPOs 2005-October 2011, another research by PwC, points out that Russian companies traditionally prefer to be listed on the LSE. Biggest numbers of Russian companies’ IPOs were seen there in 2006 (18) and 2007 (15). During the crisis the number of IPOs fell significantly. Still, 7 IPOs took place in 2011. MICEX, RTS is the second most popular IPO venue for the Russians. MICEX hosted maximum IPOs in 2007 (14) and 2010 (7).

Russian companies traditionally prefer to be listed on the LSE

On the whole in 2005 through October 2011, Moscow Stock Exchange served as the venue for 36 IPOs while London Stock Exchange welcomed 59. All the other stock exchanges hosted far fewer Russian IPOs than MICEX, RTS and LSE: NASDAQ OMX had only 4 offerings, Deutsche Borse had 3, and HKEX 2 more.

LSE is most popular with Russian oil & gas companies (9 IPOs), real estate (8), metals companies (6), transportation & logistics companies (5). Moscow Stock Exchange has been the venue for a maximum number of IPOs by companies in the retail & consumer goods and utilities industries (7). HKEX was preferred by metals and mining.

In total between 2005 and October 2011 capital was most often raised through IPOs by real & consumer goods and oil & gas companies (11 in each sector) as well as real estate and utilities companies (10 in both). Companies in the agriculture and chemical industries, food producers & retailers favored this method of raising capital least of all.

Morgan Stanley has been the most popular IPO underwriter among the Russian companies in the period in question (20 IPOs). Other investment banks that underwrote Russian companies’ IPOs include Deutsche Bank and Renaissance (12 IPOs each) and Credit Suisse (11).

Morgan Stanley was most often chosen by oil & gas companies and transportation & logistics companies; while real estate companies preferred Deutsche Bank, technology & InfoCommn companies opted for Golden Sachs, and metal companies went with Credit Suisse.

In terms of the number of GDR listings Russia was the most frequent jurisdiction for issuers (28), 5 listings took place in Cyprus, 2 in the Netherlands, Channel Islands, Luxembourg and Cayman Islands.

When going for international placement, the Russian companies mostly went with one of the Big 4 accounting firms as a reporting accountant. Russian accounting and audit firms were involved as reporting accountants at IPOs on MICEX-RTS.

The most prominent Russian companies that launched their IPOs in 2005 through October 2011 include Yandex (2011, NASDAQ OMS), НMS Group (2011, LSE (GDRs)), RUSAL (2010, HKEX), RusHydro (2009, LSE (GDRs)), CTC Media (2006, NASDAQ OMX), M. Video (2007, MICEX), Sberbank (2007, MICEX), AFK Systema (2005, LSE (GDRs)), Evraz Group (2005, LSE (GDRs)).

Аlexey Gerasimov,
Exclusively for RS