Russian retail investment boom drives IPO of SPB Exchange

Russian retail investment boom drives IPO of SPB Exchange
SPB Exchange, that specialises in selling international stocks to Russian retail investors, has listed its own shares on its own exchange. / wiki
By bne IntelliNews November 22, 2021

Russia's second-largest stock exchange bourse, SPB Exchange, has raised about $175mn in a highly anticipated initial public offering (IPO) on its own platform, Reuters reported citing the announcement of the bourse.

As followed by bne IntelliNews, SPB Exchange, already Russia’s leading platform for the trading of international securities, is also driving a retail investment boom in Russia and is at the forefront of the retail equity investment revolution

More and more Russians are putting their money in equities as low interest rates for bank deposits coupled with rising living costs incentivise alternative means of saving.

Notably, on November 18 the exchange set the share price at the upper range of the previous guidance of $11.5 per share, anticipating high demand. Eventually the demand exceeded expectations, with the book oversubscribed more than fivefold at $800mn and the bourse raising $175mn versus $150mn originally expected.

The successful IPO will likely support the plans of the exchange for a subsequent listing on the Nasdaq Global Select Market in 1H222.

Shortly prior to the IPO the exchange announced two major steps to expand operating capacity and accessibility. SPB Exchange teamed up with market data provider Refinitiv, and secured the first ever credit rating for its clearing subsidiary, boosting its appeal to professional and retail investors alike.

"SPB Exchange is proud to have attracted such a high-quality diverse investor base, including a significant share of retail investors, within a listing on its own venue. We are delighted that our vision of becoming a leading retail trading platform has been fully supported by our core clients in Russia and that our IPO has also gained strong interest from key local and international institutions," the CEO, Roman Goryunov, commented.

The proceeds of the IPO will be used to boost its infrastructure and continue with its ambitious expansion plans into new markets and instruments, making trading more convenient and efficient, thus creating a foundation for further growth of the Russian financial markets.

The SPB Exchange believes that the IPO demonstrates the vast potential of retail investing in Russia and reconfirms the role of the exchange as the leading trading venue "when it comes to international equities trading thanks to a deep liquidity, thin spreads, best execution capabilities and nearly around-the-clock trading". 

SPB Exchange is helped by its 19-hour working day, which allows its securities to be traded not only across Russia’s 11 time zones, but also on other continents, including in US markets. Previously Goryunov told bne IntelliNews in an exclusive interview that the exchange now sees more than 25,000 accounts being opened daily due to easy access to foreign blue chips, and a large liquidity pool allowing for uninterrupted operations despite time zone differences. 

In 1H21, total trading volume on the bourse reached approximately $206bn, representing an increase of 356% from approximately $45bn in 1H20.