Russian IPOs head to London and New York
London and New York came out equal as listing destinations for Russian initial public offerings (IPOs) in a report on
the Russian equities market by Ansdell Associates, the communications agency.The survey covered 25 fund managers, with
$4.9bn (€4bn) of investments in Russian equities and total assets under management of $2.6 trillion.
Nearly half the respondents, 48%, did not express a preference as it is easy to buy depositary
receipts in either market. These are securities that allow overseas companies to be traded on a foreign exchange like
a domestic stock.
Of those investors expressing a preference for a listing destination, 28% said they would choose the London Stock
Exchange, while 24% opted for the New York Stock Exchange (NYSE). One European emerging market fund manager said he
preferred London because it was cheaper and has less stringent requirements.
John Connor, a Russian equity dedicated fund manager at Third Millennium Advisors, said: "A listing on the NYSE
gains respect among investors and, even though it costs you more to comply in the US, you can make up for this through
better returns.'
Mark Mobius, global emerging market fund manager at Franklin Templeton, said a listing in Russia was becoming more
important. He said: "The significance of local investors has been increasing very fast in the past two to three
years, and we expect the trend to continue.'
More than two thirds of investors, 69%, said they saw a shift away from dollar-denominated export sectors, such as
oil, and predicted more Russian IPOs would come from outside the natural resources sector.
Mark Butler, global emerging market fund manager at Aberdeen Asset Managers, said: "The main problem in Russia
is still a lack of listed companies. There are some non-commodity investment opportunities, such as Wimm-Bill-Dann
Foods, but many of these companies trade on high multiples.'
Wimm-Bill-Dann, a juices and dairy products manufacturer, raised $207m two years ago to became the first Russian
consumer goods company to list on the NYSE in an offer led by ING Barings.sbasar@efinancialnews.com
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