EQUITIES: MICEX-RTS picks nine banks for IPO
The newly merged MICEX-RTS Russian index has looked after its own by selecting three domestic banks for its up to US$1bn IPO, but filling out the syndicate with a mix of international names.
The mix of international and domestic names in a massive syndicate is not a surprise as the IPO is really about putting the exchange on the map. The government is keen to maintain the local element of the deal, but also attract foreign capital to the market.
The Kremlin is targeting Q4 2012 for launch, but leads believe the beginning of 2013 is a more realistic expectation.
Russia’s two biggest banks, Sberbank and VTB, will work together at the top level on an IPO for the first time, as joint global co-ordinators and joint bookrunners alongside Credit Suisse and JP Morgan. Deutsche Bank, Goldman Sachs, Morgan Stanley, Renaissance Capital and UBS are joint bookrunners.
The total of nine bookrunners highlights that this is also a marketing effort for the banks to the government as fees and league table credit will be negligible. MICEX-RTS has to respond to IFR’s requests for comment.
The idea behind using three Russian banks is to make sure the deal isn’t dominated by London accounts, but the UK emerging funds – and companies that cater to them with London listings – are also a key target.
The Russian government is becoming increasingly frustrated as Russian firms continue to domicile and list elsewhere in the world, and the merger of the two exchanges was conceived to counter this exodus. The IPO of MICEX-RTS is viewed as a major liquidity event that will kick start the development of Moscow as a hub for investors. To this end, the government is also increasing the deal size from the US$300m targeted last year to somewhere between US$500m-US$1bn. This will dilute the government’s stake in the exchange further but
the earlier figure was not considered a strong enough liquidity event to attract quality global funds.
The Kremlin is targeting Q4 2012 for launch, but leads believe the beginning of 2013 is a more realistic expectation. Either way, the IPO, if successful, is likely to be a significant milestone in Russia’s attempt to develop Moscow City, the business development centre designed to rival the City of London and Wall Street.
“By 2013 we want to have the ability to absorb a local IPO entirely locally,” one government official told IFR at a recent investor conference. “We have been working to liberate the pension and insurance fund system in the country, and the IPO of the exchange itself will galvanise the Russian market,” he added.
