Renaissance leaps to top ten for IPOs
Russia's leading investment bank Renaissance Capital has entered the world top ten for initial public offerings in the first half of this year, despite remaining concerns over corporate governance in Russian companies and political interference.
Renaissance Capital announced it had leapt from 29th place to number ten in the world list of investment banks running initial public offerings.
Record placements such as VTB, oil services giant Integra and Russia's biggest steel plant MMK have helped the firm's transactions top $US 12 BLN in the first half of the year.
“Investors are prepared to and are very familiar with the risks in Russia and prepared to buy this story so a lot of these factors came together approximately in the 2nd half of last year and the 1st half of this year. We expect that the volume will be $US 6 BLN if the Rusal IPO does not happen, and if it does happen, it will be very approximately $US 15 BLN,” predicted Ruben Aganbegyan, Rencap's Managing Director.
“We could return to the markets with a secondary public offering by 2009. The money raised will be pumped above all into our retail arm, the most dynamic sector in the banking industry today. Our research has shown that only 5% of Russians currently use a range of banking services,”gave his prognosis Vasil Titov VTB's Vice-President
Russia has yet to fulfill its potential in other ways. The market sees poor corporate governance and political interference as offering little protection for investors.
“All these rules in my opinion need to be quite simplified, and the barriers to public markets need to be made as easy as possible. On the other hand I believe it is quite important to protect shareholders' rights, and to make quite rigorous rules to avoid any kind of manipulations,”assumed Ruben Aganbegyan.
Investors have to balance the vast economic opportunities in Russia with political instability. It is a sign of the massive growth potential of the country's economy that at the moment many are prepared to run this risk, and tap into the IPO boom.