16 February 2021
Russia’s Pandemic Winners Drive $10 Billion Share Sale Line (1)
Gold miners, retailers seen leading biggest year since 2013
Local day-trading surge boosts Moscow’s appeal as IPO venue
Russia is on track for a blockbuster year of share sales, led by gold miners, e-commerce companies, and other firms emerging stronger from the pandemic.
Initial and secondary public offerings by Russian companies on domestic and foreign exchanges could exceed $10 billion this year, according to Alex Metherell, co-head of global banking at VTB Capital, the investment-banking arm of Russia’s second-biggest lender. That would be the strongest showing in at least eight years, Dealogic data show.
For now, markets are awash with stimulus, tempting local companies to join the global IPO rush after Russia’s benchmark MOEX stock index hit a record high last month. That could change if opposition leader Alexey Navalny’s arrest and imprisonment triggers tougher sanctions from the U.S. and Europe, but some investors are betting fresh penalties wouldn’t be severe enough to rattle markets.
“A lot of the companies planning equity offerings benefited from the pandemic, and their value increased,” said Fedor Tregubenko, UBS Group AG’s Russia chief. “Financial markets had a large liquidity boost last year, so there is demand for new investments.”
Fix Price, Russia’s biggest dollar-store retailer, announced plans this week to sell shares in an initial public offering in London. Online retailer Ozon Holdings Plc’s $1.27 billion listing in November was the best market debut for a Russian company since 2011.
At least two Russian gold miners are looking to cash in on booming prices of the metal, which reached new highs last year as the pandemic crippled global economies. Nord Gold SE said in January it’s evaluating strategic options including a potential IPO in London, while BlackRock Inc.-backed GV Gold is said to target a valuation of more than $1 billion in a Moscow listing.
“Some inevitable postponements and delays triggered by the Covid-19 interruptions have meant that 2021 is looking particularly enticing for the quality and mix of the IPO pipeline,” VTB’s Metherell said.
Russia is home to an active retail buyer base, which boosted trading volume in the country during coronavirus lockdowns. This has contributed to companies considering an IPO at home, rather than taking their deals to London or New York, according to Dmitry Brodsky, Renaissance Capital’s head of equity capital markets for Russia & the CIS.
“We can see considerable pools of liquidity moving from London to Moscow, additionally propped up by a strong growth in Russian retail investors’ activity,” he said.
Russia was once a major source of equity sales in Europe, and companies raised more than $31 billion from stock placements in 2007, according to data compiled by Bloomberg.
But offerings dwindled in the last decade as Russia’s annexation of Crimea in 2014 and the attempted assassination of an ex-spy four years later in the U.K. triggered waves of sanctions. As the coronavirus spread last year, tumbling prices of oil stifled the Russian market.
“The success of the first wave of IPOs pre-summer will help shape the second half of the year,” said Irackly Mtibelishvily, chairman of corporate and investment banking at Citi CEEMEA.