The Moscow Exchange announces decision to float… on its own platform

21 Jan

The Moscow Exchange’s decision to float on its own platform could provide a novel opportunity to gauge the worth of the country’s financial sector. But with the process only open to institutional investors, further information about the offering could be limited.

While it is restricting disclosure of information on the public offering within the US, shares will be available to institutional and qualified investors there; as long as they are “offshore transactions” as defined in, and in reliance on Regulation S of the US Securities Act. Such transactions will be exempt from requirements to register with the SEC, under Rule 144A of the Securities Act or “pursuant to another exemption,” it said in a public statement.

The company, OJSC Moscow Exchange MICEX-RTS, hopes by becoming listed publicly it will enhance its profile and reputation. Alexander Afanasiev, Chief Executive Officer of Moscow Exchange, said: “Today’s announcement… marks a crucial step on our path to greater transparency and openness as a company, as well as bringing governance fully in line with best international practices. We are confident that this will become a key factor in strengthening Moscow’s position as an international financial centre and make Russia’s financial market more attractive for both Russian and international investors.”

Among the 694 issuers who acknowledged trading on the securities exchange, at the end of 2012, are some of Russia’s largest companies by market capitalisation: LUKOIL, Rosneft, Sberbank, VTB and Gazprom. The Exchange’s operating income for the first nine months of 2012 was equal to £330 986 000. Its net income, with an adjusted EBITDA margin of c.66%, was £133 226 000. Over the same period, it ranked tenth in the world for bond trading by volume (by value), ninth for derivatives (by number of contracts traded) and eighteenth for equities (by market capitalisation).

Furthermore, it has a consistent track record of growth, with a compound annual growth rate in consolidated operating income of 23% from 2009 to 2011. These statistics it claims are compatible with figures from RTS Group, realtime financial systems provider, starting on 29 June 2011.

Credit Suisse, J.P. Morgan, Sberbank CIB and VTB Capital are acting as both global coordinators and bookrunners for the offering. Other financial giants Deutsche Bank, Goldman Sachs International, Morgan Stanley, Renaissance Capital and UBS Investment Bank are solely acting as joint bookrunners.

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