Russian IPO salad hides some dodgy ingredients

A Russian flag flies outside the Consulate General of the Russian Federation in New York. REUTERS/Andrew Kelly

MOSCOW, Oct 18 (Reuters Breakingviews) - The recipe for Russian salad is a matter of fierce national debate. The dish, which natives call Olivier salad, can contain eggs, vegetables, meat or seafood, and even pickles, all bound together with mayonnaise. Russia’s recent burst of initial public offerings offers a similar hodgepodge.

Stock market listings by the country’s companies have been scarce since 2014, when President Vladimir Putin’s annexation of Crimea led to European and U.S. sanctions, which spooked overseas investors. Since then, there’s been at best a handful of IPOs each year. As recently as 2018, there were none.

Buoyant stock markets have turned the tide. Ozon (OZON.O), a $10 billion e-commerce group, listed in New York last year, while $8 billion discount retailer Fix Price made its debut in London in March. Now at least seven other Russian companies are preparing offerings, putting 2021 on course to be the busiest year for new listings from the country since 2007, when companies such as state bank VTB (VTBR.MM) pushed total IPO proceeds to $21 billion. The global IPO boom has doubtless helped: the amount raised from new listings worldwide more than doubled year-on-year in the first nine months of 2021, according to Refinitiv data.

As in other countries, the Covid-19 pandemic has accelerated some companies’ development. Online real estate listings group Cian, which Reuters last month reported is seeking to raise $350 million in New York, has benefitted from greater internet use. App-based car sharing company Delimobil, which operates a fleet of more than 18,000 vehicles and is the market leader in Moscow, is targeting a similar amount. Food retailer VkusVill taps into the trend for healthier eating.

Other budding IPOs are less appealing. Mercury Retail, which wants to raise more than $1 billion in Moscow, is a bet on Russian consumers whose real income is falling. Selling mostly alcohol and cigarettes may also turn off investors concerned by the social impact of their holdings. The SPB Exchange, a St Petersburg bourse which enables Russians to trade western stocks, is planning to be the first company to list on itself next year. But it will struggle to compete with its larger Moscow rival.

Barring a stock market crash or a new round of more severe sanctions, Russia’s IPO pipeline is unlikely to dry up entirely. But as with a Russian salad, some ingredients will not be to everyone’s taste.

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- IT firm Softline launched an initial public offering in London and Moscow to raise around $400 million. On Oct. 18 it announced an indicative price range which would value the group’s equity at up to $1.9 billion.

- Real estate website Cian on Oct. 13 launched an IPO in New York and Moscow.

- Russian insurance group Renaissance Insurance launched an IPO in late September and announced an indicative price range on Oct. 11 which would value its equity at up to 73 billion roubles ($1 billion) after the deal.

- Car sharing company Delimobil filed for an IPO in New York on Oct. 8, saying its revenue for the six months ended June 30 was 5 billion roubles ($69 million), more than double a year earlier.

- Convenience store chain Mercury Retail aims to raise over $1 billion in an IPO in Moscow by year-end, Reuters reported on Sept. 30, citing financial sources.

- Food retailer VkusVill and SPB Exchange are among those preparing public listings, Reuters has reported, citing sources familiar with the matter. The Wall Street Journal, citing sources, reported in September that VkusVill could be valued between $3 billion and $5 billion and the exchange at $2 billion.

Editing by Peter Thal Larsen and Oliver Taslic

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Dasha is a columnist in London writing about the consumer goods sector, as well as Russia and Turkey. She has been at Reuters since 2012 as deals reporter in London and Turkey correspondent, covering the 2016 coup and the war in Syria. Prior to that she produced business news on BBC radio and worked as an investment banking analyst. She holds a degree in Politics, Philosophy and Economics from the University of Oxford.