A window of optimism (albeit a small one) is opening in the global equity markets for Russian companies contemplating an initial or secondary share offering (IPO/SPO), and companies are rushing out plans to list.
Sberbank's SPO of a 7.6% stake looks increasingly likely to happen and could happen as soon as next week. And, a raft of other companies are close to offering investors shares.
The list already includes Megafon and Promsyvazbank, whose chairman said in an interview with bne this week that it is "ready any time" to go to market to offer up to 25% of its shares to raise fresh capital. "We are completely ready and are watching the market carefully," Artem Konstandian said.
The latest addition to the growing list is NefteTransService, which said it is preparing to float its shares in London in the first half of 2013, with a view to raising between $300m and $500m. Analysts estimate the company's value at $1.4bn.
NefteTransService was the country's largest private railway operator, measured by the amount of cargo transported in Russia, last year and handled 71.1m tonnes of cargo - more than the 69.6m tonnes transported by Russian freight operator Globaltrans Investment, which raised over $500m in a share sale in July.
These IPOs are looking possible as the Russian market becomes more buoyant. While the RTS is up only 6.4% year to date, the index was dragged down over Easter. The market action can be broken down into three periods and the market has unusually rallied strongly over the summer, up 15.6% between June 1 and September 1.
With the German Constitutional court ruling out of the way, the worst fears of an imminent collapse of the euro have receded again and the US Federal Reserve is widely expected to announce some form of quantitative easing this week, which will only add to momentum in emerging market stocks.
Finally, the slowdown in China's economy and the appreciation of the local currency in Brazil (plus the universal unpopularity of the Indian market) means investors are thinking about cycling out of these markets and into Russia. Turkey is possibly the only other alternative in the EM world, but the strength of the rally there over the first half of this year also means Russia offers more attractive returns now.
Roll on an autumn rally!
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