Russian Companies Retreat From London Stock Market
LONDON (Financial Times) - Russian companies are in retreat from London’s stock market, stung by lacklustre valuations and investors wary of geographical risk and poor corporate governance.
A London listing was seen as a mark of pride for many Russian corporations over the past decade, with 46 flotations and $69.4bn raised since 2005, according to data from Dealogic. However, no new Russian companies have entered the London Stock Exchange since 2014 and just two have premium listings in the FTSE 250. PIK, the country’s largest house builder, this week announced it would delist from the LSE, the second Russian company to leave so far this year and the sixth in the past 18 months. Seven years ago, with commodity prices high and western relations with Moscow warmer, a London listing was all the rage for Russian corporates keen to promote themselves as significant global operators and executives hungry to tap the City’s capital. But a crash in oil prices and a recession at home has hurt valuations, sanctions against Moscow have undermined sentiment and many companies have struggled to shake off reputational worries and convince investors of their credibility. Because of their history and the fact that many are focused on the energy, mining or commodity sectors, many of the large companies from Russia, Kazakhstan and other former Soviet Union territories are typically controlled by oligarchs or families sometimes reluctant to cede control to shareholders, and have relationships with governments that institutional investors are not accustomed to. "The main reasons are not political, but company-specific issues. A London premium listing has its own rules, both formal and informal, and?.?.?.?represents a significant commitment from the company,” said Vitaly Nesis, chief executive of Polymetal, a Russia-focused gold and silver miner that has bucked the trend as compatriots have abandoned listings. "Investor relations, corporate governance, the need to obey sustainable development rules — for many companies, not just Russian, these are too significant, or they do not see the long-term value of the investment required,” Mr Nesis told the Financial Times.
A London listing was seen as a mark of pride for many Russian corporations over the past decade, with 46 flotations and $69.4bn raised since 2005, according to data from Dealogic. However, no new Russian companies have entered the London Stock Exchange since 2014 and just two have premium listings in the FTSE 250. PIK, the country’s largest house builder, this week announced it would delist from the LSE, the second Russian company to leave so far this year and the sixth in the past 18 months. Seven years ago, with commodity prices high and western relations with Moscow warmer, a London listing was all the rage for Russian corporates keen to promote themselves as significant global operators and executives hungry to tap the City’s capital. But a crash in oil prices and a recession at home has hurt valuations, sanctions against Moscow have undermined sentiment and many companies have struggled to shake off reputational worries and convince investors of their credibility. Because of their history and the fact that many are focused on the energy, mining or commodity sectors, many of the large companies from Russia, Kazakhstan and other former Soviet Union territories are typically controlled by oligarchs or families sometimes reluctant to cede control to shareholders, and have relationships with governments that institutional investors are not accustomed to. "The main reasons are not political, but company-specific issues. A London premium listing has its own rules, both formal and informal, and?.?.?.?represents a significant commitment from the company,” said Vitaly Nesis, chief executive of Polymetal, a Russia-focused gold and silver miner that has bucked the trend as compatriots have abandoned listings. "Investor relations, corporate governance, the need to obey sustainable development rules — for many companies, not just Russian, these are too significant, or they do not see the long-term value of the investment required,” Mr Nesis told the Financial Times.