Companies postponing IPOs for longer but not shelving offerings - VTB Capital
MOSCOW. July 6 (Interfax) - Companies are putting initial public offerings off for longer as market woes affect their plans, but they are not shelving their offerings for good, Elena Khisamova, head of Equity Capital Markets at VTB Capital, told Interfax.
VTB Capital has quite a big portfolio of potential capital market transactions, many of which were planned for the middle of last year, Khisamova said.
"We've been conducting many deals since the summer of 2011. Most of them were delayed due to the unfavorable market conditions, but those delays have increased. Deals were being put off for a quarter or half year in the past, but now, as a rule, for a year," she said.
But not one company has shelved plans for an IPO. "Companies are looking for alternatives to IPOs in the short- or mid-term, and there are more in the way of private placements," Khisamova said.
She said ten Russian deals, including IPOs and SPOs, could take place in the next six or 12 months when the markets show their first signs of stabilization. A year ago some 30 placements had been penciled in.
"The markets need to remain stable for a more sustained period [than the debt market], around six-to-eight weeks, for an IPO or and SPO to be a success. If, say, the market grows 5%-10% in a matter of days, this does not automatically mean a window has opened," Khisamova said.
She said 2012 promised to be the most difficult post-crisis year for the equity markets. The market plummeted in 2008, bottoming out in January 2009. But Russia had a series of share offerings worth $2.5 billion in total as early as the second half of 2009. Khisamova said 2010 and the seconds half of 2011 were the most successful periods for the Russian market by quantity of IPOs, and that more than 15 new companies successfully placed shares.
"There have only been a few deals in the last 12 months, and the outlook until the end of 2012 remains uncertain," she said.
The capital market is complicated not just in Russia but globally, Khisamova said. Only those companies that meet all investors' requirements in terms of liquidity, asset quality and cash flow can be successful in the market in these conditions, she said.
"The main problem with Russian IPOs is that in terms of volume, offerings will not be above average at best and will therefore be less liquid. Investors are not interested in deals of less than $500 million-$1 billion," she said.