OREANDA-NEWS  On 08 October was announced, that in Q3 2008 capital raised through initial public offerings (IPOs) by companies from Russia and other nations of the Commonwealth of Independent States (CIS) fell to the lowest level since 2004, according to research issued by The PBN Company, the strategic communications consultancy. Q3 2008 raised the smallest amount of capital of any quarter with CIS IPO activity since VimpelCom’s flotation in 1996.

Only one CIS company – Acron, a Russian fertilizer company – floated in Q3 of this year, raising only USD 2.7 million in a dramatically reduced, technical offering. This contrasts with the USD 1.1bn raised in Q2 and the USD 566m raised in Q1 of 2008. Acron’s IPO is the smallest CIS IPO to date in terms of capital raised.

“As Russia and the CIS have begun to feel the full effects of the global financial crisis, companies are postponing their offerings as they await more hospitable market conditions. To date we know of 43 companies that postponed or pulled their flotations this year,” said Peter B. Necarsulmer, Chairman & CEO of The PBN Company. “Given that market recovery is increasingly improbable through the end of the year, we are unlikely to see more than a handful of IPOs at most – and even that is probably optimistic.”

“Although there are approximately 120 companies believed to be considering flotations in the next 5 years, this is very dependent on the ability of the global and domestic markets to recover their liquidity and investor confidence,” Necarsulmer added.

In addition to this IPO activity, Razgulay, the Russian grain producer that floated on Russian exchanges in 2006, raised USD 295.2 million in an additional share sale on 21 July. NYSE-listed Mechel, which raised USD 335 million in a 2004 IPO, announced that its public offering of new preferred shares, announced on 24 June, was postponed.

Download the Quarterly Russia and CIS IPO Review - Issue 3.