Remember back in the heady days of Russian IPOs – when companies like Rosneft and Sberbank, among dozens of others, led the charge in new stock listings on the London Stock Exchange? Alas, the past couple quarters have not been so robust due to the global credit crunch, and many blockbuster IPOs coming out of Russia have had to delay their plans for new share issues while they wait for sunnier weather in the markets (Rusal being a prime example). Although Russian banks and financial institutions which issued IPOs near the end of last year have not been performing well, the IPO slowdown may soon experience a reversal of fortunes with a mega-offering from Globaltrans, a Russian freight railway operator, which is looking to raise over $500 million on the LSE. Additionally, the supermarket chain Magnit is looking to raise $480 million. According to a report in the Wall Street Journal, analysts believe that the timing of both these large scale IPOs shows that the business community is settling into the post-election scene, and are no longer afraid that politics will overshadow their efforts to raise funds. Back to business as usual?
A report by Russian research company PBN this month predicted that the country’s float pipeline will fill up this year, but won’t reach the volumes of last year when Russian companies raised $29.4 billion through IPOs, more than any other European country.”There has been a slowdown in IPO activity world-wide as the credit crunch has created an unfavorable environment for flotations,” said Peter Necarsulmer, chairman and chief executive of PBN. “Russian companies were also concerned that the Russian presidential election in early March would overshadow a flotation in the first quarter. With the question of the presidential succession now settled, the pipeline for forthcoming IPOs remains strong.”He added: “One side effect of this pause is that we expect to see an increase in interest in strategic stake sales and other M&A activity as companies seek alternative routes for growth or exit.”