Investment banks in Russia, led by VTB Capital and Sberbank CIB, enjoyed a 9 percent jump in fees from initial public offerings last year amid signs the country’s growing consumer market is attracting investors.
Bankers in Moscow earned $38 million from IPOs in 2013, compared with $35 million in the year-earlier period, according to data compiled by Freeman & Co., a New York-based consulting firm. Fees from secondary equity deals advanced 6 percent to $63 million, the data show.
While investors have been attracted to Russia’s oil and metals markets in the past, retailers are gaining favor after companies like supermarket chain OAO Magnit advanced 65 percent last year. Russia is forecast to be Europe’s biggest retail market by 2018 as chains expand, according to Euromonitor research.
“Historically, only about a third of Russian IPOs have made money for investors,” Erik DePoy, an equity strategist at OAO Gazprombank, said by phone today. “But last year was the biggest year for deals since 2007 and it’s the consumer and retail names where it’s easiest for bookrunners to attract investors.”
Detsky Mir, the country’s largest retailer of children’s goods, this month selected Credit Suisse Group AG (CSGN) and JPMorgan Chase & Co. (JPM) to help it sell shares. Hypermarket chain Lenta LLC chose VTB Capital, JPMorgan, Credit Suisse, Deutsche Bank AG (DBK) and UBS AG (UBSN) for an IPO planned for next month. Metro AG’s Russian cash and carry unit and Obuv Rossii, a Siberian-based shoe retailer, are also talking to bankers about selling shares.
VTB Capital earned the most in fees last year in Russia from IPOs, mergers, bonds and loans, taking in $101 million, Freeman data show. Sberbank was second with $58 million, followed by JPMorgan with $56 million. Gazprombank and France’s Societe Generale SA were fourth and fifth, earning $53 million and $44 million, respectively. VTB, Sberbank and Gazprombank are all state controlled.
Total investment-banking fees in Russia rose to $843 million last year from $837 million in 2012, according to Freeman. Fees reached a record $1.4 billion in 2007, when VTB Group raised $8 billion in its IPO.
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