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Russia: Bonanza or bust for banking IPOs?

One market segment – banks – has been noticeably absent from the glut of Russian companies rushing to undertake IPOs in recent years. Is there now a danger that, after the long wait for exposure to Russia’s banking sector, investors will be overburdened with supply? Kathryn Wells reports.

Ring fence on investment is breached

IN THE PAST two years, barely a month has passed without news of the latest Russian company planning an initial public offering. London has been the exchange of choice for the country’s largest companies, with Moscow garnering more new listings after the Federal Securities Market Commission’s decision to introduce a requirement that companies wishing to list overseas must also undertake a domestic listing.

Few sectors have held back from the dash to the market, with investors being offered the chance to buy into the oil and gas, consumer goods, metallurgy and telecoms sectors, to name just a few.

The one exception has been financial services. To date, not a single Russian bank has completed an IPO, leaving state-owned savings bank Sberbank, listed in Moscow, as the sole entry point for investment in the sector.

In some ways this has not been surprising — historically, the poor reputation of Russia’s banking sector has preceded it. It has only been with the growth in disposable incomes and the subsequent consumer boom that investors have grown more enthusiastic about accessing the country’s financial institutions as a means of harnessing this.

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