Russian companies delisting from exchanges to reduce risks
Russian businesses, which once actively proceeded with equity listings, are now getting more cautious. Last year, a number of initial public offerings (IPO) were postponed, and some companies even delisted their shares in order to avoid risks associated with lower share prices.
Investment bankers are suggesting their Russian clients delisting from local and international exchanges, says Reuters adding that market uncertainty caused by the expansion of Western sanctions against Russia has pushed companies' share prices lower. Companies use share listings to attract money for business expansion or other purposes, but if share prices drop, it may result in early debt repayments or more solid collateral held against loans. Besides, listing requires a regular disclosure of information, which may be also sensitive.
Last year, a number of IPOs worth around $4 billion were postponed by Russian companies. It has been the first year without IPOs in Russia in at least a decade. Although the banking community still expects some of the listings to eventually happen, bankers are suggesting other companies delisting their shares. ''Bankers are actively working on buyback programmes and delistings from international bourses,'' confirmed an investment banker from a top-five Russian bank.
In 2018, Russia's third-largest food retailer Dixy Group decided to delist from the Moscow Exchange, and Megafon mobile company cancelled its London-listed shares. According to banking sources, several companies including Sistema, the holding company for a number of assets, were also looking at the delisting option last year. Sistema, which is listed in Moscow and London, has a market capitalisation of $1,46 billion in Moscow. The conglomerate's telecom unit, MTS, is Russia's top mobile operator with a market capitalisation of $8 billion.
However, Sistema decided against delisting its shares due to the high cost of a buyback, said one of the sources. Reuters estimated that the company would have to spend 31 billion rubles to buy the 32,4% of its shares that are currently free floating to delist.
Sistema's CEO Vladimir Yevtushenkov confirmed that bankers had offered his company a delisting but declined to comment further. According to the conglomerate's spokesperson, the company's management did not study and are not currently studying such an opportunity. ''At the same time, Sistema is regularly analysing the situation on capital markets and looking at the opportunities arising,'' added the spokesperson.