Moscow Exchange Aims IPO to Boost Capital Markets

The Moscow Exchange, Russia’s main venue for trading in stocks, bonds, foreign exchange (FX) and derivatives, plans an initial public offering (IPO) in an effort to persuade more Russian companies to opt for a domestic listing rather than one abroad.

Although a statement issued by the exchange did not offer a figure for the size of the offering, press reports suggest that it could be as much as US$500m.

The Moscow Exchange was formed in 2011 by the merger of Moscow’s two main stock exchanges, Moscow Interbank Currency Exchange (MICEX) and the Russian Trading System (RTS). The combined MICEX-RTS, which was valued at around US$4.5bn, promoted itself as a ‘one-stop’ shop for trading in a full range of financial instruments. Associated execution, clearing and technology/connectivity options are also on offer.

The Moscow Exchange will offer shares to Russian institutional and retail investors, as well as offshore investors and qualified institutions in the US. However its biggest single shareholder, the Central Bank of Russia, will retain its 24.3% stake. Other shareholders include Sberbank, with 10.3%, as well as Unicredit, VTB, Gazprombank, US private equity fund Cartesian Capital and the Russian Direct Investment Fund (RDIF), a state-backed private equity fund.

Russia’s president, Vladimir Putin, has expressed his ambition for Moscow to become a major global financial centre and arrest the trend for Russian companies to seek listings in London and New York. However, investors have expressed reservations over shareholder rights in Russia and a sharp decline in trading volumes. Figures issued by the exchange suggest that the volume of MICEX-traded stocks dropped by around 40% last year to roubles (RUB) 9.1 trillion, or around US$300bn.

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