Russian companies may raise the most money this year from share sales since 2007 as the government starts its 1 trillion-ruble ($34 billion) privatization program, Renaissance Capital said.
Equity offerings by companies including hydropower producers, gold miners, pipemakers and state-run banks will probably raise $30 billion, Arie Kravtchin, head of equity capital markets for Russia, said in a phone interview yesterday. Initial public offerings will account for up to $20 billion and government asset sales for up to $10 billion, he said.
“There is plenty of liquidity on the market to meet this large pipeline,” said Kravtchin. “Investors will find the cash if it’s an interesting deal at the right price.”
Prime Minister Vladimir Putin’s government in October selected RenCap and nine other banks to help sell assets over the next three years, raising funds to narrow the country’s budget deficit. The privatization list includes OAO Sberbank and VTB Group, Russia’s two largest lenders.
Equity sales could return to a pre-crisis peak as long as oil and metal prices remain high, boosting investor appetite for assets in the world’s biggest energy exporter, Kravtchin said. Russian companies raised a record $36 billion in 2007, according to data from Morgan Stanley, when the price of oil averaged $72.32 a barrel. Crude averaged $79.61 a barrel last year.
Five Russian companies have already announced plans to raise more than $3 billion so far this year. Nord Gold NV, a unit of billionaire Alexei Mordashov’s steelmaker OAO Severstal, said on Jan. 17 it plans to raise more than $1 billion in London for expansion and to repay debt. Billionaire Oleg Deripaska’s OAO EuroSibEnergo, Russia’s second-largest hydropower producer, is planning a $1.5 billion IPO in Hong Kong in the first quarter, according to two people familiar with the matter.
Pig-Iron, Pipes, Pumps
OAO Koks, a Siberian coking-coal and pig-iron producer, said Jan. 12 it will seek about $600 million in a London listing. Pipe company ChelPipe Group and pump manufacturer HMS Hydraulic Machine & Systems Group both announced plans for IPOs this month without disclosing how much they planned to raise.
RenCap, which underwrote the most Russian equity sales last year after VTB Capital, is advising both EuroSibEnergo and HMS on their share sales.
The increasing volume of Russian issue may prove “a drag on the market” if liquidity dries up, according to Chris Weafer, Moscow-based chief strategist at UralSib Capital.
There are “undoubtedly” more listings to come, Weafer wrote in a Jan. 18 report. “Issuers that lost out in 2010 will be keen not to miss any favorable listing window this year.”
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