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Moscow Stock Exchange IPO twice oversubscribed

Moscow Stock Exchange IPO twice oversubscribed
The volume of bids for a stake in the Moscow Stock Exchange has reached about $1bn, which is double the initially planned $500mn.

The placement price stands at about $1.83 per share, making the Stock Exchange capitalization to about $4.2bn.

There has been a lot of interest from domestic and international investors in the first placement in Russia in 2013. Among the big names are the European Bank for Reconstruction and Development (EBRD), China Investment Corporation (CIC), CartesianCapital and BlackRock funds, that were all attracted through Russia Direct Investment Fund (RDIF).

Credit Suisse, JPMorgan, Sberbank CIB and VTB Capital acted as both coordinators and book runners, with Deutsche Bank, Goldman Sachs, Morgan Stanley, Renaissance Capital and UBS just running the books.

“The interest by international investors proves the attractiveness of both the Moscow Stock Exchange and the whole Russian stock market,” said Kirill Dmitriev, CEO at Russian Direct Investment Fund (RDIF).

The Fund also participated now having about 4.5% of the Moscow Exchange. Retail brokers and domestic players such as Otkrytie and Finam also entered the game, Vedomosti daily added.

Experts agree the IPO looks promising, as trade volumes in a spot market are growing and the business infrastructure is being actively developed after the merger of the formerly separate RTS and MICEX floors.

Investcafe analysts expect revenues to increase by about 10% a year. But that growth could slow as uncertainty around stock operations in Russia persists.

“… development prospects for the Moscow Stock Exchange for the next 2-3 years, to our mind, look quite vague,” says Ekaterina Kondrashova of Investcafe.

“In particular, there’s no certainty about the privatization period for state assets and companies’ obligations to place in Russia. Since 2005 about 60% of issuers have preferred to place in London and there’s the risk that the tendency will continue,” Kondrashova concluded.