Russian issuers are looking for opportunities to list publicly – and exchanges are competing to snap them up. Historically, companies have looked to London.
Hong Kong is reaching out to Russian enterprises looking to list – and Lawrence Fok, Executive Vice President, Hong Kong Exchanges and Clearing, Moscow, is touting investment opportunities in emerging markets. “In Hong Kong we have a lot of capital – not only from domestic, hard-core investors, but also possible future capital from mainland China, Southeast Asia.” Russian companies that fall under the strategic sector law – which limits foreign investment in 42 areas – cannot list more than 25% of their shares abroad. Those that operate in natural resources are face even tougher limits of 5%. Russian companies raised a record $31 billion from initial and secondary public offerings in 2007. Fertilizer company Acron was the only Russian company to float in the third quarter of 2008 and raised only $2.7 million, according to Bob Sakharov, President, Olma Investment Canada, Moscow. “If you're a Russian entrepreneur now, given the valuation the market is going to give you, you might want to hold off before you hold your IPO and wait for a better price and potentially find alternative sources of financing – whether it's through private equity deals or bank loans.” When the IPO market does revive, it could be in a very different neighbourhood. Gazprom and Serbia in new talks on NIS Trading halts set to become fewer on Russian exchanges Gazprom prepares for future demand with Yamal