‘A lot of companies planning equity offerings benefited from the pandemic’
Financial markets are likely to see many public offerings by Russian companies this year
Several Russian companies, which have benefited from the pandemic, are planning to go public this year. Experts note that a spike in retail investor activity in the Russian market made some of them consider a public offering in Moscow rather than in London or New York.
Russia is on track for a blockbuster year of share sales led by gold miners, e-commerce companies and other firms emerging stronger from the pandemic, says Bloomberg. In 2021, initial and secondary public offerings by Russian companies on domestic and foreign exchanges may exceed $10 billion, considers Co-head of Global Banking at VTB Capital Alex Metherell. According to Dealogic financial markets platform’s data, that would be the strongest showing in at least eight years,
“A lot of the companies planning equity offerings benefited from the pandemic, and their value increased,” commented Fedor Tregubenko, head of UBS Group AG in Russia. In November, online retailer Ozon Holdings raised over $1 billion via an initial public offering (IPO), which became the best market debut for a Russian company since 2011. According to Tregubenko, financial markets had a large liquidity boost last year, so there is demand for new investments.
Last month, Russia’s key budget retailer Fix Price announced plans for an IPO in London. The country’s gold miners are also looking to capitalise on booming prices, as the precious metal reached new highs in 2020. Nord Gold SE’s is working on strategic options including a potential IPO in London, while GV Gold is considering both Moscow and London-based listings.
Russia’s active retail investor base boosted trading volume during COVID-19 lockdowns. Head of Equity Capital Markets for Russia & CIS at Renaissance Capital Dmitry Brodsky believes that this revitalisation has pushed companies into considering an IPO at home rather than in London or New York. “We can see considerable pools of liquidity moving from London to Moscow, additionally propped up by a strong growth in Russian retail investors’ activity,” he said.
In the 2000s, Russia was a major source of equity sales in Europe: in 2007 alone, companies raised more than $31 billion from stock placements. Later, waves of sanctions made offerings dwindle, and last year, the pandemic stifled the Russian market. However, now markets are awash with stimulus, with Russia’s benchmark MOEX index hitting a record high last month. “Some inevitable postponements and delays triggered by the COVID-19 interruptions have meant that 2021 is looking particularly enticing for the quality and mix of the IPO pipeline,” considers VTB’s Metherell.