IPO Troubles Revisited Upon Russia’s London Listings

lse0701.jpgSome years ago, the words IPO and Russia took on the dynamic of water against oil, as numerous Russian firms, often with the Kremlin’s guiding hand, failed to meet basic accounting standards in order to raise funds on key global markets such as the London Stock Exchange.  First we had the fiasco surrounding Rosneft and its questioned ownership of expropriated Yukos assets, then the multi-year campaign from Rusal to list in London, only to eventually go to Hong Kong for a $2.2 billion listing, and now today we have some more interesting news.

The Financial Times is reporting that Vladimir Potanin’s group Prof Media and Interros are shelving their plans for an April IPO in London which could have raised $1 billion, while Alisher Usmanov’s group Metalloinvest is also reconsidering plans to put 20% of its shares on the market.

The excuse given is that the government run bank Sberbank has providingsuch generous funding that Interros no longer needed to look for othersources … which is really a euphemism for poor market conditions.  Itdoes not appear, however, to be a case of regulatory arbitrage and dodgykeeping these companies out of public offerings in London – but ratherjust a diminished appetite for investment since their heydays of 2008.

Knowing just how incredibly risk averse and openly ignorant so manyinvestors can be, it won’t be long before Potanin and Usmanov dust offtheir plans and go out to collect big from those with short memories.