Other Russian companies to join New York IPO Frenzy

MOSCOW — Health food supplier JSC VkusVill and the PJSC SPB Exchange are gearing up for IPOs in the United States this year or early next year, according to people familiar with the companies, the latest d ‘a series of Russian companies joining the global rush for IPOs.

This is shaping up to be one of the busiest year for equity sales since Moscow was hit with international sanctions in 2014. Record stock markets abroad and an improving economy at home, aided by the rising oil prices, have leveled the way for some companies.

Another key factor contributing to the rebirth of IPO in Russia is geopolitics. Although relations between the United States and Russia remain near their lowest since the Cold War, the June summit between President Biden and his Russian counterpart, Vladimir Putin, allayed some market concerns over tough new sanctions. , according to investors.

“The environment is quite favorable right now,” Viktor Szabo, chief investment officer at Aberdeen Standard Investments in London. “Growth has been stable and tensions with the United States appear to have eased.”

The old building of the Saint Petersburg Stock Exchange. SPB Exchange is expected to be valued at around $ 2 billion.


Photo:

Peter Kovalev / Zuma Press

So far in 2021, Russian companies have issued around $ 6 billion in shares, the highest volume in five years, according to VTB Capital,

the investment banking branch of Russia’s second-largest lender. The boom in retail investment in Russia has also helped boost the market.

“2021 looks like it could surpass 2014 numbers,” said Alex Metherell, co-head of the world bank at VTB Capital.

Discount retailer, fixed price listed in London in March.


Photo:

Andrey Rudakov / Bloomberg News

Major Russian IPOs this year include discount retailer Fix Price, which was listed in London in March, and private health clinic operator European Medical Center EMC and forestry group Segezha Group PAO, both listed in Moscow. . Ozon Group, one of Russia’s largest online retailers, raised $ 1 billion on its New York stock exchange listing in November.

It is still a drop of water compared to the whole market. This year, 282 companies raised more than $ 104 billion on U.S. exchanges through traditional IPOs, the highest volume ever, according to Dealogic, helped by stock market gains and the global economic recovery.

Online retailer Ozon Group has raised $ 1 billion on its New York stock exchange listing.


Photo:

Andrey Rudakov / Bloomberg News

“Russian companies have always been strong believers in developed markets, and now they see an opening,” said Alina Sychova, Moscow-based head of capital markets origination at brokerage firm Sova Capital.

VkusVill, a Russian version of the multinational chain Whole Foods, is expected to confidentially file documents for an IPO in the United States soon this year or early next year with a double listing in Moscow, according to people familiar with them. plans of the company.

VkusVill is expected to be valued at between $ 3 billion and $ 5 billion, according to the sources. The company works with local producers to provide healthy food through a chain store and online grocery delivery service. VkusVill declined to comment.

SPB Exchange has previously filed confidential documents with the U.S. Securities and Exchange Commission and is expected to be valued at around $ 2 billion, according to people familiar with the process. SPB Exchange declined to comment.

The stock exchange, specializing in providing access to national investors to trade Apple Inc.,

You’re here Inc.

and other global equities, is experiencing a boom in individual investors. The number of active accounts nearly tripled to over 850,000 in August compared to the same month last year.

The companies will join Russian companies operating in New York, including tech giant Yandex NV, online recruiting platform Headhunter Group PLC and Mobile TeleSystems PJSC,

the largest mobile operator in the country.

Following Russia’s 2014 invasion of Crimea in Ukraine, Washington imposed successive rounds of sanctions on Moscow. In April, the United States announced measures prohibiting banks and institutional investors from buying new Russian government bonds denominated in rubles at auction in response to the country’s alleged cyberattacks and electoral interference – actions Moscow denies. The sanctions were viewed by investors as limited in scope.

Since then, there have been signs of appeasement, investors say, including the Biden administration’s decision in May to lift sanctions on the controversial Nord Stream 2 gas pipeline to Germany, and the summit between the two leaders. in Geneva in June.

Two themes emerged during the first summit between President Biden and Russian President Vladimir Putin.

The Russian market, as well as other emerging markets, carries risks for investors. Prior to 2014, a boom in listings of Russian companies in London, especially in the resource sector, led to questions about insufficient transparency and questionable corporate governance, as well as a series of delistings.

The recent experience of Chinese companies also shows how quickly the regulatory climate can change. Beijing has cracked down on some of its big companies, many of which are listed in New York City.

Russia, however, generally grants more business freedoms to its major private companies, according to investors. “We don’t see or expect the same level of regulatory repression as in China,” Szabo said.

Write to Georgi Kantchev at [email protected]

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