While Europe and the US are showing signs of recovery, mainly caused by a return of investor confidence in the space, Russia has been struggling in the fundraising and exit markets. According to an IPO Watch Survey conducted by PricewaterhouseCoopers, there has not been a single IPO in the third quarter of 2009 in Russia.
That is not to say that Russian companies are not going public, they’re just not going public in Russia. In Q3 2009, the largest IPO in the PwC survey was that of Rushydro, a Russian power company that raised €424m.
And Yandex, the most prominent Russian company expected to IPO, is also not looking to list on the Moscow exchange. Recently valued at £2.5bn, the internet search engine, considered to be Russia’s answer to Google was looking to list on the Nasdaq exchange before the downturn.
“The UK is so much better than anything the Russians can provide and the liquidity of LSX is much better. There’s not much that can be done with the Moscow stock exchange because global Russian companies want to list elsewhere,” says an EVCJ source.
John Roberts, director and joint founder of Aurora Russia, is slightly more optimistic about Russian private equity and believes it is not as bad as it seems. “It is still a small market with a small amount of funds so we’re doing fine,” he says. “In terms of IPOs in Russia, you might as well IPO in London because capital has become so global. It is very difficult to IPO at the moment because investors just aren’t interested. They’re looking for distressed situations. They’ll be back, everything is cyclical,” he adds.
As for private equity fundraising, Russia has also been hit hard. According to Private Equity Intelligence (Preqin), so far in 2009, only four funds have been raised with an aggregate capital of US$1.2bn. This is a steep decline from 2007, when 13 funds raised US$6bn.
“Fundraising is very difficult because allocations have been put on hold. We felt we needed to get our toe in the water. We think next year people will want to get back into private equity,” says Roberts.