Share offerings by Russian companies will pick up in the second half as oil above $100 and the Moscow bourse’s introduction of a central depositary lures foreign investors, the head of Troika Dialog’s U.S. unit said.
Oil company RusPetro Plc’s (RPO) London initial public offering in January is the sole IPO by a Russia-based company in 2012, compared with five last year and as many as 13 in 2007, the most since at least 1999, data compiled by Bloomberg show. Futures expiring in June on Moscow’s dollar-denominated RTS Index slipped 0.4 percent to 170,260 in U.S. trading yesterday.
Crude’s 8.2 percent gain last year helped Russia, the world’s largest energy exporter, achieve a budget surplus equal to 0.8 percent of gross domestic product, and inflation slowed to a post-Soviet record in February. Moscow’s Micex Index (INDEXCF), the cheapest of 21 emerging markets tracked by Bloomberg, will jump 25 percent in the next few months, said Chris Osborne, chief executive officer of Troika Dialog USA. The debut of a central depositary in July will have a “major impact” by widening the pool of foreigners able to invest in Russia, he said.
“When the market is ready for deals again, there are some very interesting companies that will be listing,” Osborne said in an interview at Bloomberg’s headquarters in New York yesterday. “Consumer will be represented, petrochemicals, transportation, agriculture, and more real estate. If things keep going the way they are now, I don’t see why the second half of 2012 shouldn’t be fairly active.”
Vladimir Putin’s return to Russia’s presidency has freed investors to focus on positives such as rising oil, low inflation and the surplus, he said. The central depositary -- an independent body that makes sure money is paid or debited and securities ownership is transferred after a trade occurs -- will boost the number of foreign investors able to buy and sell Russian assets to include pension funds, trusts and other “conservative money,” Osborne said.
The Micex-RTS exchange, created out of the merger of two indexes in December, will introduce the central securities depositary mid-year, Vice President Sergei Sinkevich said on March 6.
The Bloomberg Russia-U.S. 14 Index (RUS14BN) was little changed at 111.56, after slipping 0.6 percent on March 14. Coal miner OAO Mechel (MTL) rose 2.8 percent to $10.71 in U.S. trading, after the stock rallied 4.3 percent to 315.10 rubles on the Micex, the equivalent of $10.73. It was the biggest advance since Jan. 26.
The Market Vectors Russia ETF (RSX), a U.S.-traded fund that holds Russian shares, rose 0.8 percent to $32.93 in New York yesterday. The ETF has gained 24 percent this year. The RTS Volatility Index (RTSVX), which measures expected swings in the index futures, fell 2.8 percent to 32.67.
Moscow-based RusPetro raised $250 million in its Jan. 18 IPO. Six Russia-based companies had IPOs in 2011 and two in 2010, while there were no new listings in 2009 and 2008 amid the global financial crisis, data compiled by Bloomberg show.
Mechel (MTLR) and the gold unit of OAO Severstal, the second- largest steelmaker, are among Russian companies that delayed IPOs in 2011 as the European debt crisis and the threat of a global slowdown deterred investment in emerging-market assets. The Micex fell 17 percent last year, after two previous years of gains.
Russia’s Economy Ministry has proposed that state-run companies pay out 25 percent of profit under International Financial Reporting Standards as dividends, the Vedomosti newspaper reported on March 11, citing proposed legislation.
“This is a way to pay for social spending,” Osborne said yesterday. “I don’t think any company will suffer. State oil companies like Rosneft and Lukoil, Gazprom, Sberbank make sufficient cash to pay out dividends.”
During his presidential campaign, Putin pledged to fund programs aimed at affordable housing, as well as higher pensions and salaries for state employees. The former KGB officer took over as president from Boris Yeltsin in 1999, giving up the job for the prime minister’s post in 2008 because of a constitutional limit on serving more than two consecutive terms.
OAO Sberbank (SBRCY), Russia’s largest lender, fell 1.6 percent, the most since March 6, to $13.66 yesterday in New York, shrinking the discount to shares traded on in Moscow to 0.4 percent, data compiled by Bloomberg show.
Moscow-based Sberbank plans to start marketing about $5.7 billion of shares on April 16 as part of the government’s plan to sell stakes in state-controlled companies, people with knowledge of the process who declined to be identified said yesterday.
The lender fell 2.6 percent to 100.63 rubles, or the equivalent of $3.43, on the Micex yesterday.
‘Widens the Circle’
“Privatization widens the circle of private investors, this is good for the company in the long-run,” Alexander Vassiouk, an analyst at Prosperity Capital Management in Moscow, said by phone. “The quality of the corporate governance will go up, the effectiveness and modernization of organizational and technical processes may lead to significant profits.”
Crude oil for April delivery dropped 0.3 percent to $105.11 a barrel in electronic trading on the New York Mercantile Exchange yesterday. Brent oil for April settlement fell 1.1 percent to $123.55 on the London-based ICE Futures Europe exchange. Urals crude, Russia’s chief export blend, slipped 2.7 percent to $119.99.
Polyus Gold International Ltd. declined 4.9 percent to $3.09 in New York, the biggest drop since Sept. 28, making it the worst performer on the Bloomberg Russia-U.S. 14 (RUSN14BN) gauge.
Polyus Share Sale
Polyus, Russia’s largest miner of gold, plans to sell 7.5 percent of its stock within 45 days of publishing its annual report in April, Vedomosti reported yesterday. That’s sooner than previously planned, according to the report that cited two unidentified people familiar with the matter.
Gold futures for April delivery rose 1 percent to settle at $1,659.50 an ounce on the Comex in New York yesterday, the most since Feb. 21.
The Standard & Poor’s GSCI index of 24 raw materials fell 0.3 percent to 700.85 yesterday, retreating for the second day. Nickel and tin declined on the London Metal Exchange.
Sberbank agreed to acquire Troika, Russia’s oldest investment bank, last year. Moscow-based Troika plans to increase its 100 investment banking employees by 25 percent to 40 percent this year, Todd Berman, co-head of investment banking, said in November.
VTB Capital Plc, the investment banking arm of Russia’s second-largest bank VTB Group, will “formally” open its New York office in the middle of April, Atanas Bostandjiev, VTB Capital’s chief executive officer for the U.K. and International Business, said by e-mail yesterday. Moscow-based VTB Capital has operations in London, Hong Kong, Singapore, Dubai, Sofia, Paris and Vienna, according to its website.
VTB’s new New York operations will “take some market share away from us and from other Russian brokers, but with the Sberbank acquisition we are going to take issuance share from them,” Troika’s U.S. CEO Osborne said. “They were the only state bank with an investment bank involved in the debt and issuance market. Now we’re there.”
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