Share placement of companies related to the Russian Federation: benefit with significant risks
Two Russian companies have placed their shares on the Moscow and Frankfurt stock exchanges. This gave hope to the market, which is under the influence of sanctions.
In just a few days, the owners of the Norilsk Nickel mining and smelting combine sold securities worth over $ 550 million.
After announcing a record profit, TCS Group received $ 150 million through the sale of shares in ABB.
“You can’t be sure of something during the recession of the world economy and the sanctions, the new package of which may appear at any time,” analysts say. Nevertheless, large sales of shares by Russian companies suggest that the market may soon come to life.
2018 was a failure because of the announced US sanctions. Not a single Russian company has made an IPO. This is not surprising: many business beneficiaries did not want any fuss about their names. It’s known that restrictions are imposed not only in relation to legal entities. Many cases of sanctions affecting the owners of large businesses. At the same time, 2017 ended with several placements, of which there were also accelerated: some owners were in a hurry to withdraw money before the presidential elections in the country.
Share placement of companies: it all depends on the market behavior in the coming months
The market expects clarity related to the US-China trade agreements. It is from the uncertainty in the relationship of the superpowers that all world platforms are reeling. The oil market reacted with a falling price on Brent, despite all attempts to control the cost of hydrocarbons from the OPEC + countries. American analysts saw this long-awaited recession, which further destabilized the situation. Therefore, the general mood can hardly be called optimistic.
In this case, the shares of “Russian Nickel” sold out as well as possible: the reporting and the increased cost of metals affected. The placement took place at a seven percent discount to the real value of the company. An even greater discount was offered by the TCS Group for its papers. Analysts noted that any discount between 5 and 10 percent is good for Russia when it comes to first deals.
The placement of shares of the mining and smelting plant showed that investors are still interested in commodity exporters. In general, the range of companies attractive for the purchase of their securities is narrow. The vast majority have already offered the market an initial public offering of their shares in different years. On the part of the business beneficiaries, there is also a desire to get rid of excess shares: in the present conditions, it makes no sense to hold packages of 70 percent or more. At the same time, the diversification of the investment portfolio has not harmed anyone yet.