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The Moscow Times Moscow Guide – Winter 2008

Since the middle of autumn one of the most important topics of discussion, could only be … no, not the financial crisis… New Year! The winter issue of The Moscow Times Moscow Guide is entirely devoted to New Years celebrations. Seven great ideas for celebrating the “Night of Nights” will help readers finalise their plans and choose how and where to party, give fresh ideas and lots of practical advice.

And don’t forget – problems will come by themselves, but happiness and luck need an invitation. That why the more cheerful and light-hearted your celebration of the coming holiday is, the happier and more successful 2009 will be for you.

The Crisis: Signs of a Kremlin Fearful Of Unrest
Sociologist Yevgeny Gontmakher has painted a disturbing picture of what might emerge from the financial crisis, forecasting continued unemployment, huge protests and spreading violence.

Market Matters: Huge Grain Harvest No Boon for Farmers
This year Russia is enjoying the biggest grain harvest it has ever seen -- and farmers couldn't be more worried.



Thursday, January 08, 2009 Updated at 31 December 2008 22:36 Moscow Time.

The Moscow Times » Issue 3996 » Business For Business

Stuart Leasor, Managing Director, Financial Communications / The PBN Company

Challenges for Russian Companies Seeking International Listing

25 September 2008By Stuart Leasor / Special to The Moscow TimesWhat a difference a year makes. A year ago I would have written about how Russian companies had closed the valuation gap with their Western peers and how there was a relentless appetite for Russian stocks. This time last year, 15 Russian companies had tapped the international equity markets and raised $24.5 billion in new issues. In 2008, 3 companies have listed, raising less than $1billion, not even 4% of the previous level. The newswires are full of companies postponing their listing plans "until market conditions improve."

What a difference a couple of months make. The RTS has fallen by half since May, when it led the world. Due to declining oil prices, increasing inflation, slower industrial production, the Prime Minster's comments about Mechel, the TNK-BP dispute and events in South Ossetia, Russia has gone from being a sure-fire investment destination back to an increasingly risky bet.

A few months ago, Russia was hailed as a "safe haven", immune from global market turmoil. That idea has been shattered. External factors have had a direct impact on Russian markets. The global banking crisis has spread to Russia, as exemplified by the perilous status of KIT Finance.

In this context, the challenges for Russian companies seeking an international listing are huge -- but the challenges are surmountable in the medium term.

And while this may be the worst of times, it may prove to be best of times for Russian companies to regroup and consolidate their plans for an international listing.

Stepping back from the current turmoil, Russian companies have been key drivers in the global IPO market, building from VimpelCom's $111 million NYSE listing in 1996 to topping the European league with 23 IPOs raising nearly $30 billion across international and domestic exchanges in 2007. They will be leaders again when the credit tide turns.

The credit crunch is global, not local. The world market for IPOs is seriously curtailed, Virtually no company, anywhere, is seriously considering tapping the international equity markets.

The increasing number and size of Russian IPOs has reflected the rapid development of Russian companies, not only in terms of financial results, but also in terms of corporate infrastructure and governance. This new maturity opens new possibilities in terms of fundraising opportunities. Russian companies are able to start looking further afield and select a capital market that best suits their needs. This is happening already with rumours that some companies are considering listing outside of Europe and the US for the first time in Honk Kong.

But whatever happens, Russian companies must not forget the hard-earned lessons that the real value is gained by transparency and corporate governance. International investors will be even more discerning about where they put their money and they will have a lot of choice, globally.

To paraphrase Tolstoy, good companies are all alike, but every bad company is bad in its own way. They will be looking for good companies.