Русский
During this year, a long-awaited IPO boom has occurred in the Russian market. In less than a year, 14 new issuers placed their shares on the open market, and another began collecting applications — the best result since 2007. Driving this are institutional investors, but increasingly private investors are also now involved. For 2025, Russian bankers see a continuing improvement in performance.
In part, the boom has occurred as Russian investment capital has been scared away from international markets due to Western sanctions and the freezing and disposal of their assets. To encourage the return of Russian capital, the Russian government has also introduced numerous tax incentives, other financial inducements, and specific policies designed to attract Russian capital back to Russia, in addition to considerable Russian market opportunities suddenly becoming available due to Western corporate exits. As President Putin has coyly remarked, “Russian money is safe from sanctions in Russia.” What we are now seeing are the results: Russian capital is instead being invested back into Russia.
In 2024, the Russian market for primary share capital and IPO transactions (Initial Public Offering) finally emerged as independent of international markets and foreign investors. During 2023, there were eight IPOs valued at ₽41 billion (US$423 million). In the first ten months of 2024, that figure is now ₽81 billion (US$835 million) – nearly double last year’s performance. There will be other IPOs during 2024 as well – Lambuiz, a manufacturer of cardboard packaging for milk and dairy products should have completed its IPO at the end of October, valued at just under ₽1 billion (US$10.5 million).
In addition, over the past two years, 14 Secondary Public Offerings (SCO) have taken place, with a total value of ₽158.8 billion (US$1.64 billion).
In terms of the sheer volume of initial transactions, 2024 has seen the highest IPO volume in Russia for the past 17 years.
Historical Background
No one could have imagined such a rapid market recovery just two years ago, as Western sanctions have confronted the Russian economy and its businesses with unprecedented challenges. The Russian stock markets were not immune. Among the hardest hit were the debt and equity capital markets, which were cut off from cheap money from non-residents who had been willingly buying Russian shares and Eurobonds for many years.
For example, during Rosneft’s IPO, British Petroleum (BP) purchased US$1 billion of equity, Malaysian Petronas purchased US$1.1 billion, and China’s CNPC US$500 million.
In VTB’s IPO, among the largest buyers was the Singaporean state fund Temasek, which bought 5% of the placed securities (US$400 million), and its Capital International Fund about 3% of the placed securities (US$240 million).
That is why for many years, Russian IPOs were placed by international investment banks such as Goldman Sachs, JPMorgan, Morgan Stanley, Citi, Deutsche Bank, UBS, and many others, while the main placements were in the world’s largest exchanges: the London Stock Exchange (LSE) and North America’s NASDAQ. At that time, the percentage of foreign capital in Russian IPOs averaged between 70–75%, and in some cases, 90%.
Now these foreign investments into Russian IPOs are for the present, largely a thing of the past.
Adaption
Transactions carried out in 2024 show that the Russian market has successfully adapted to new non-market conditions and managed to become fully operational in attracting not only debt but also share capital. The main change is that the IPO agenda began to be determined not by foreign investment banks as before but by Russian domestic banks and brokers. International investors have been replaced by domestic institutional and private investors.
Russia’s institutional investors have always played an important role in the market, and many of the Russian portfolio managers also managed foreign equity funds, but Russian private investors are a relatively new phenomenon. Largely cut off from SWIFT and the ability to send money overseas, that capital – earned in Rubles – is now placed in Rubles in Russian stocks. This closure of world markets to Russian investors, and the blocking of foreign securities, has facilitated a change in Russia’s traditional investor profile.
With the isolation of Russia, it has been Russian individuals who have now emerged as the new key driving force in the Russian stock market. According to the Moscow Exchange, individual accounts in stock trading volume now represent 77% of the total for the second consecutive year. Ordinary Russians are buying into the new Russia.
By the end of September 2024, the number of unique brokerage accounts on the Moscow Exchange amounted to 33.8 million, with 4 million new individual accounts opened since January 1. According to the Bank of Russia, in the period January-June, new private Russian investors placed ₽9.4 trillion (US$97 billion) into the Russian stock market, with this capital now in search of interesting investment ideas.
As a result, achieving IPO status became more attractive to a wider range of companies, including SMEs, which were not previously of great interest to Russian investors. During 2024, the smallest company able to conduct an IPO was the IT business Traffic Light Group, who raised ₽1.4 billion (US$14.5 million). Genetico, who specialise in genetics and reproductive medicine, raised ₽1.5 billion (US$15 million). The average investment in these placements was just ₽60,000 (US$620).
Needless to say, the real excitement amongst Russian individual investors was caused by lPOs with a capitalization of over ₽50 billion (US$515 million). According to the Moscow Exchange, the MTS Bank (Personal finance) IPO attracted 202,000 inquiries and was 10 times over-subscribed. Diasofta (IT) was 35 times oversubscribed and Europlan (Automotive leasing) 9 times. On average, amongst all Russian 2024 IPOS, order books were oversubscribed five times.
Regarding 2025, Russia’s capital market players remain optimistic, with a common theme being the normalization of the Russian market and its economic performance, including the stabilization of the key interest rate. Due to pent-up demand, 2025 may bring even more high-quality IPOs.
T-Bank’s Head of Capital Markets Administration, Anton Malkov does not rule out up to ten major IPOs, while a big deal reserve is also building up. Companies from different sectors, very interesting business areas, and many industries not yet represented on the market are all now coming to the market. A large percentage of these newcomers are raising capital to invest in expansion overseas, especially within the CIS, EAEU, and BRICS. Russian businesses seeking expansion into friendly countries are now seen as being both patriotic, exotic and more importantly – onto a sustainable growth trend.
This article has been translated from and adapted from the article “IPO: новый сезон” which originally appeared on Kommersant here.
Further Reading
