Russian companies to discard IPO concerns?
As the credit crunch in the United States continues to send tremors through the global markets, investors the world over are starting to hedge their bets. For Russia this looks likely to lead to a reduction in the number of companies floating their shares at home and abroad.
“It becomes much too unpredictable to have an issue in this type of environment. You can never be sure of the price, if your price happens to be on a bad day, you can completely ruin your valuation. I would say that if the instability continues after the end of August, then we’ll see a lot of the planned issues for the autumn delayed,” says Chris Weafer, Alfa-Bank chief strategist.
Earlier this month, Russia's largest oil company Rosneft cancelled plans for a Eurobond sale, while Gazprom has postponed its Eurobond issue planned for July. Analysts say now the country's largest aluminium company Rusal may be forced to put off plans to launch an IPO later this year.
The instability in the major global markets led by the U.S. is being felt throughout the emerging economies, and Russia's MICEX Exchange in Moscow is no exception. But global trends are not the only major factor when Russian companies decide to float their shares.
The Kremlin will welcome a new president early next year, for the first time this decade, and some of the country's largest shareholders may want to go ahead with share placements before Putin moves on.
“While the political structure is still stable and they are still in favour, so to speak – they want to monetize at least part of their holdings, so that whatever happens, everyone can say they’ve got at least a billion dollars in the bank,” jokes John Heisel, equity sales expert at Sovlink Securities.
If that's the case, then Russia may prove an exception, keeping capital issuance alive despite the wobbly state of the global markets.