By Mark Robinson, Head of Equity Research at Unicredit Securities
The list of Russian companies preparing to go public this year continues to expand. According to Vedomosti, in addition to Metalloinvest, SUEK, Prof Media and Sovkomflot, whose IPO plans have already leaked to the press, the Victoria retail chain and fish producer Russkoye More may place shares on stock exchanges as soon as this spring.
Our view: We believe there are many more deals in the making and see a strong chance of the total volume of initial and secondary placements by Russian companies in 2010 exceeding the 2008 level ($8.7bn), but likely falling short of the record $41bn in 2007.
In our view, a large volume of placements might lead to stock overhang weighing on certain sectors in 2010. According to the latest EPFR data, international funds have been net buyers of Russian assets for 11 of the past 12 months, building overweight positions, so IPOs and SPOs could redirect cash away from currently traded equities.
We note, however, that even in 2007 the RTS Index gained over 27%.
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