Despite the prolonged crisis, the domestic business actively seeks to go to the IPO. Alexey Bujanov, director of the Bengala Investment investment company, in the material for Daily Moscow will tell you what an IPO is, and will explain why large companies are interested in placing their shares on the stock exchange.
What is an IPO.
IPO (Ai-Pi-O) - Initial Public Offering, "Primary Public Offer". In Russian IPO could be called PPP (P in Cuba), but this term moved to us with the original abbreviation.The essence of the IPO comes down to the fact that the company first places its shares in the financial market for a wide range of buyers. Thus, the company says something like:
"Hello, we know how to make a good business, give us money (for example, on scaling) - and we will share profits"
Only qualified investors who received the appropriate certificate for this can be inserted into the IPO (different brokers are different to obtain status). Thus, they become conditional co-owners of the company, which can count on a share of profits, relevant to the size of acquired shares.
Companies overlook the IPO when they are in the best possible way: at this point, the shares can be sold more expensive, thereby attracting more investments. However, in the crisis 2020, several large Russian firms were immediately on the IPO: Sovcomflot, "Airplane" and Ozon. For comparison: in the calm 2019th of large Russian companies, only HeadHunter publicly posted.
A similar paradox is not a coincidence, but a tendency. In 2021, Russian companies have a desire to go to the IPO and will do it, although the crisis is not going anywhere. To understand the logic, you should estimate the retrospective of events.
History IPO in Russia
In the West, the company became public even in the past millennium. The first domestic company, which reached the global financial market, became VimpelCom in 1996.
The 1998 crisis has suspended the movement of the Russian business in this direction, but in zero this fashion covered all major companies. From 2000 to the Crisis 2008, domestic companies actively went on an IPO primarily at the sites in London and New York.
It was not only in fashion
First, the company simply needed finances on modernization and new projects. These funds were difficult and expensive to attract a debt, and money in the capital in the Russian understanding was considered "free", despite the fact that the share of shareholders was blurred. Nevertheless, the shareholders themselves usually supported IPO: stocks received a real value for evaluating an independent international platform - and therefore the probability of their favorable use increased.
Secondly, there was still fresh memory about dashing times when the company you like could select different bases. In case of primary placement, deep audit and legal verification closed the issue of possible claims by Western independent expertise.
The publicity of the company then balable an excessive voluntary of the administrative apparatus, officials, competitors and regulators. It was believed that such a company falls under the world jurisdiction and could not be worried about further development.
So it lasted before the crisis of 2008. The IPO managed to get MTS, Wimm-Bill-Dan, Pyaterochka, Sistema, Rambler, "STS" and "Rosneft"
After the start of the crisis, the possibility and - together with low cost estimates - the desire to become publicly dubed. But when the crisis passed - from 2010 to 2014, - Western companies again went to the IPO, and Russians pulled themselves behind them.
In 14th (after the Crimean events), the topic of commitment and speech of international, broader jurisdiction died. Due to sanctions for Russian companies, the global public market has practically closed.
Why companies go to the IPO now
Our days do not look favorable to access IPO - the sanctions are not going anywhere and, judging by the latest events, there will be even more, the epidemic has loaded into the crisis and places the planet's economy for almost a year and is not going to disappear.Large-scale sanctions against Russia will soon be 7 years old, and their ambulance is even less likely than the disappearance of the epidemic
Companies with growth potential profitably go to the IPO not only when the market is stable, but even when it grows. Investors first of all assess the growth potential of the company, and when there is a general economic growth ahead, then a separately taken company has more chances of development than in the era of the fusion.
Do not forget that serious growth happens to the crisis. For example, Farm companies shares, many of which have updated historical maxima in 2020.
Although it is not only about companies that, by the nature of the activity, it was in a pandemic in demand. The focus of the world economy took in March 2020: no one was ready for the epidemic.
It has now become clear that the problem with us for a long time, and it is somehow necessary to live. Investors and business owners adapted to the situation, and the market, cristed in fear of unpredictable events, came again
An equally important cause of the popularity of the IPO is that the coronacrisis slowed down the development of companies and markets. If earlier the question of the release on the IPO was not so pressing, now - either you go out now with a certain risk to be underestimated, or in the new twist of the crisis. And who knows if it will survive it if you do not get irrevocable financial injections.
Fortunately, many Russian companies have a good chance of a successful way out of the financial market, because due to the crisis and sanctions are objectively undervalued. Favorites First of all, the enterprises of the so-called new economy are IT-orientation companies and related structures: delivery, coworkings.
In operating plan, such companies may even lose weight - this is not a hindrance to enter the IPO. Because, unlike traditional economy (production, machinery, real estate), IT companies have much more prospects: the world needs their decisions. Investments will not only bring money to the development of the company, but will give a fair assessment in the form:
"Yes, these guys are still unprofitable, but they have invested a couple of millions of dollars - it means that there is the potential"
A characteristic example is the Russian Marketplate "Ozone". The company published on the IPO last year. The market took this placement very favorably. After the initial placement of "Ozone" added 50% of the cost (and continued to grow), although it was an operational unprofitable. This is inspired by other companies: they realized that they could count on a real estimate of their potential in monetary terms, and not only on dry recalculation of financial results.
Where go to the IPO
In addition to Western sites, Russian has long existed for the initial accommodation. Why are they needed if there are international?
First, the companies are advantageous not to choose alternative platforms, and linguistic on all possible - it increases liquidity, capitalization, which attracts investors.
Secondly, in domestic platforms, it is often much easier to accommodate, because on Western stock exchanges more stringent criteria. Companies that do not meet are limited to Russian sites whose requirements are more likely to be able to perform.
What risks the company that goes to the IPO
As a rule, all the risks of a particular business, except individual, are risks that have a financial model and the industry itself. For example, the company providing coworkings will lose customers due to a pandemic (like all companies passing office space), but there is faith that its model will allow business to recover faster.The main difference is that any problems of the public company and any management errors harm the reputation much more than a private company
Investors carefully follow their money, and mislead them - an incredible scenario: a public company undertakes to be transparent and disclose all the details of its activities.
Ozone successfully entered the IPO, including, and because it came to the classic model of a promising company, which has "many customers who are not so much money, but everything can change." A public enterprise with such conditions always risks not to be able to monetize customers - and lose investment attractiveness.
Is it possible to go to the IPO in one day
Briefly: No.
The Russian company can correctly go to the IPO in 2021, if it meets the following requirements:
- The company must be large enough and in the asset resources - primarily sectoral achievements - which investors will be located;
- There should be a development plan, which investors would be ready to believe that it is 1) implemented, 2) does not carry reputational risks;
- The company is ready for financial audit and verification in legal terms.
Consequently, if the company is large enough and promising, to decide to go to the IPO, it will not be possible to become public at one point: the development plan is not convinced of the investors, they will not be put on the company's audit for a month not to prepare.
Today, the excitement about the IPO in Russia is associated with the fact that in the economy there was a pause, capital accumulated. As soon as the market came into motion, the crisis apathy was replaced by activity that gives a chance to good accommodation
There were money that are looking for applications. But if you are not ready to go to the IPO right now, it is wiser to carefully plan the process, prepare and wait for your hour. The crisis consequences will leave gradually and then when this epidemic will finally pass, that is, after a couple of years, provided that no one is breakfast anymore in a volatile mouse.
Alexey Bujanov,
Director of Investment Company Bengala Investment
Photo: Getty.