“In 2007 Russian companies demonstrated that they are now true global players in the equity capital markets. This performance underlines the convergence between fast growing developing markets and the more mature economies,” said Peter B. Necarsulmer, Chairman & CEO of The PBN Company. “They also showed that they are sufficiently developed to withstand global market tremors, and are therefore a relatively safe haven for international investors seeking new high-growth opportunities – something few would have believed possible just a couple of years ago.
“Another sure sign of the growing maturity of CIS markets is that, whereas before IPOs were about oligarchs cashing out, now over 80% of funds raised are reinvested in the businesses,” continued Necarsulmer.
The report profiles all the year’s IPOs from Russia and the Commonwealth of Independent States (CIS), which together raised USD 34.3bn. Key highlights from the report reveal:
* Acceleration in number of CIS floats to 33 – compared with 23 in 2006 and 16 in 2005.
* Average deal size of over USD 1 billion – compared with USD 917 million in 2006 and USD 380 million in 2005. In contrast, UK issues on the London Stock Exchange averaged USD 127 million.
* Growing resilience of region – 12 CIS companies went to market after onset of the global liquidity crisis in August, raising USD 8 billion, or 23% of the total amount raised in 2007. This is 24% more than was raised in the entire 10-year period from Vimpelcom’s first issue in 1996 through the end of 2005.
* Dominance of financial sector with 52% of all funds raised. Real estate offerings were also prominent, up 731% y-o-y, with flotations from resources and mining down to only 15% of funds raised from 56% in 2005-6.
* Companies which listed on local exchanges outperformed those which listed abroad – the combined market capitalization of Russia-only listings was up 16% compared to London’s AIM and Main Market, with combined market capitalization of all CIS companies to list finishing down 1% and 5%, respectively.
* 81% of all funds raised last year were reinvested into the business – compared to only 35% in 2006 and 46% in 2005, demonstrating that CIS IPOs are no longer synonymous with exits and cash-outs by founding shareholders.
“It is not just about Russia. Ukraine was the second best performing stock market in the world in 2007 after China and began 2008 showing remarkable resistance to global market volatility,” said Necarsulmer. “Kazakhstan, which raised USD 3.8 billion in 2007, will undoubtedly continue to become an increasingly important equity play over the coming year.”
Looking ahead, 2008 should see the rise of companies from fast-growing and politically important sectors in Russia such as infrastructure, engineering, technology and agriculture, which are top of the Russian government’s agenda.
