Russian IPO slump worsens
The slump in Russia's equity capital markets deepened in the third quarter of this year, as there was only one new listing that raised just $2.7m (€2m), disproving the belief that emerging markets would be isolated from the crisis affecting the US and European financial system
So far this year, there have been only seven initial public offerings by companies in Russia, Kazakhstan and the Ukraine, raising $1.7bn, according to data from The PBN Company, a consultancy focused on the former Soviet states. This is just 6% of the $26.3bn raised at the same point last year through 22 floats.
The scale of the market setback has been so great that the equity capital raised in the year to date is 59% less than the $4.1bn raised in the same period three years ago.
The situation was worse than for Europe in general, where initial public offerings raised $14.3bn in the year to date, 79% less than the $67.1bn raised at this point last year, according to data provider Dealogic. Companies raised $957m in Europe in the third quarter, the lowest recorded level since the first quarter of 2003, when the value was $97.3m.
The only Russian float in the third quarter was by fertiliser company Acron. Although the company initially said that it planned to raise $1bn, it was forced to opt for a technical stock market listing, rather than a capital raising, in the end due to a lack of investor interest.
The news that the US Senate had approved the $700bn financial rescue package did not give Russia stock markets a fillip today. The RTS Index was flat at 1188.9, while the Micex stood at 1021.8.
Chris Weafer, chief strategist at Russian financial company UralSib, said that international investors have continued to sit on their hands as global volatility has escalated, while local traders have mainly been taken out of action due to the prohibitive cost of borrowing and the threat of margin calls on trading accounts.
This is where sharp falls in share prices eat into the equity held in trading accounts and investors are forced to either sell their assets or add more cash to its account.
-- Write to Dawn Cowie at dcowie@efinancialnews.com
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