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Capital Markets

Russian equities: Global Ports IPO makes headway

Five failed Russian IPOs in London this year; Realistic pricing key for successful deals

The first half of 2011 has been tumultuous for Russian IPOs, but bankers will be hoping for a more propitious six months after the successful pricing of Global Ports last month.

The $534 million offering was only the fifth Russian initial public offering to be completed in London this year, with another five failing. Deals planned for other exchanges, such as Russia’s Micex, have also been withdrawn.

All eyes are now on Phosagro, a fertilizer producer, which plans to raise up to $1 billion from its IPO, in the hope that the market’s topsy-turvy performance is coming to an end.

Even those companies that have managed to launch deals have seen their shares struggle in the secondary market. Only two of this year’s Russia IPOs are trading above their issue price: private lender Nomos, which launched in April, and internet search company Yandex, which listed on Nasdaq in May.

Weak sentiment

With sentiment weak, it was quite a triumph for Global Ports to get its transaction away, especially in a week that saw four flotations out of western Europe cancelled.

One of the reasons why Global Ports succeeded was that the owners were realistic about pricing, say bankers.

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