Is the flow of Russian listing to London about to start gushing once again? Credit troubles, risk aversion and market volatility have tempered the euphoric reception that companies from the former USSR were guaranteed in London a couple of years ago. Then they arrived thick and fast, despite the umpteen pages of risk factors buried in each prospectus.
The last few months have been rather quiet, as has the entire new issues market. But London, with its lighter regulatory touch, may be posed to benefit as the equity market stabilises and emerging market companies come looking for capital.
This month X5 Retail launched its previously postponed London offering of GDRs, aimed at raising $1bn to fund the acquisition of a hypermarket chain. Magnit, another Russian food retailer, became the first sizable London float of the year and the 100th Russian or CIS company to list in London.
Another London-arrival, Globaltrans, the Russian railway company, on Wednesday priced its offer. It will sell 17m new shares at a price of $13.25 for each GDR, giving Globaltrans a market value of about $1.55bn. About half of the $450m proceeds will go to shareholders with the remainder used for investment and expansion.
The price sits in the middle of the set range of $11.50 and $15 – though the company is raising more than it originally targeted. Globaltrans has also opted to float about 30 per cent of the company, which is positively generous by Russia’s tightly held standards.
Good news then for the LSE if issues from the east manage to hold up this year despite a difficult market backdrop. Good news also for some banks, like Deutsche Bank and Morgan Stanley, that have bagged spots on these deals. And let’s not forget the career prospects of the UK bigwigs willing to lend out their names to give a little reputational oomph to these London wannabes. A renewed flow of emerging market listings to London will be most welcome.
Disclaimer: Globaltrans does not operate FT Alphaville’s Caviar Express.
Related links
Globaltrans set for LSE listing – FT.com
Russia’s X5 to raise $1bn with London issue – FT.com