Hong Kong touts for Russian corporate listings

Russian issuers are looking for opportunities to list publicly – and exchanges are competing to snap them up. Historically, companies have looked to London. But while the credit crisis has hit Western markets hard, the Chinese market has fared

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.

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