More Russian IPOs bite the dust

By bne IntelliNews May 30, 2012

bne -

Dashing initial optimism at the start of the year, Russian IPO plans fell like ninepins in 2011 as investors baulked at the prices sought. This year is shaping up as bad if not worse, with Megafon and Vkontakte the latest in a growing line of Russian companies to mothball floatations.

The planned IPOs of Russian mobile phone giant Megafon and Russia's largest social network Vkontakte were both postponed on May 29, according to media reports. Whilst Megafon blmed the delay of its listing from July to September on poor market conditions, Vkontakte - often called the "Russian Facebook" - said the debacle surrounding the US giant's own recent offer has damaged its prospects.

The pullbacks add to a growing list of Russian companies who have called off IPOs in 2012, repeating the sad experience of 2011. So far this year, airport operator Domodedovo, real estate developer O1 Properties, shoe retailer Tsentrobuv and Russia's largest lender Sberbank have all postponed share offerings in 2012.

Megafon shareholders Alisher Usmanov and TeliaSonera announced the company planned to make an IPO in April, saying that 20% of the company would be sold. TeliaSonera aimed to sell a 10.6% stake, with subsidiary Megafon Investments to make up the rest.

However, as the Eurozone crisis whips up another global storm on the markets, Megafon's Russian peers have seen valuations slide. Unnamed sources point to the performance of Vimpelcom, which operates the Beeline brand in Russia and the CIS and has seen its shares drop 16.3% since April, as a particular case in point, reports Vedomosti.

Meanwhile, Russia's largest social networking site, VKontakte, also announced a delay to its plans to float, with founder and CEO Pavel Durov breaking the news via Twitter. Durov however blamed not poor the choppy markets, but the sentiment on the tech sector whipped up by the recent $16bn Facebook IPO in New York, which saw technical glitches and an ensuing share price slide.

The Vkontakte head offered no guidance on when the company may make a new attempt to attract equity finance. "The Facebook IPO has destroyed the faith of many private investors so VK's IPO is postponed for an indefinite term," Durov wrote.

Related Articles

Drum rolls in the great disappearing act of Russia's banks

Jason Corcoran in Moscow - Russian banks are disappearing at the fastest rate ever as the country's deepening recession makes it easier for the central bank to expose money laundering, dodgy lending ... more

Kremlin: No evidence in Olympic doping allegations against Russia

bne IntelliNews - The Kremlin supported by national sports authorities has brushed aside "groundless" allegations of a mass doping scam involving Russian athletes after the World Anti-Doping Agency ... more

PROFILE: Day of reckoning comes for eccentric owner of Russian bank Uralsib

Jason Corcoran in Moscow - Revelations and mysticism may have been the stock-in-trade of Nikolai Tsvetkov’s management style, but ultimately they didn’t help him to hold on to his ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss