Shifting conditions for IR in Russia

Oct 28, 2011
<p>More than 100 delegates gathered in Moscow this week for the annual IR Magazine Russia &amp; CIS Leading Edge IR Conference</p>

There was plenty to discuss at the annual conference of IR magazine Russia & CIS – the Russian edition of IR magazine – which took place in late October.

While a chilly wind swirled outside, guests gathered at Moscow’s ornate Ritz-Carlton hotel to discuss the permutations facing Russian issuers at home and on the international stage.

The first presentation came from Sergey Sinkevich, a vice president at MICEX, the Russian stock exchange, which is set to merge with its smaller rival RTS by the end of the year.

Sergey Sinkevich
Sergey Sinkevich, MICEX

The merger is expected to boost liquidity and the IPO market, making a domestic listing more attractive to Russian companies.

Sinkevich used his speech to call for regulatory change to help the local market, principally reform of the rules that restrict pension fund investment in equities.

Presently less than 1 percent of pension fund assets are invested in the stock market, said Sinkevich, while 84 percent are in low-income bonds.

This talk prompted a lively debate about what Russia could do to boost investment from local and overseas investors. It would help if ordinary Russians had some spare money to invest in stocks, pointed out one audience member.

London’s role

Turning to the international stage, Trevor Barton, a board member at the Russo-British Chamber of Commerce, gave a speech that posed the question: can London maintain its position as the prime location for IPOs?

Barton began his speech by comparing the London market to a Rolls-Royce, with its long history and stately manner.

A few years ago the road was very smooth and the Rolls-Royce appeared to be accelerating away, he explained. But the road has become bumpier, and a few four-wheel drives seem to be catching up.

‘How much longer can that Rolls-Royce stay ahead of its younger and, perhaps, nimbler rivals?’ he asked.

Trevor Barton
Trevor Barton, Russo-British Chamber of Commerce

To stay ahead, London must protect its reputation by insisting on high standards of transparency and accountability, said Barton. ‘That is what London is known for. That is our strength. We must play to that.’

London has recently come under fire for being too open to overseas companies with poor governance and small free floats.

Barton also encouraged the city to work harder at promoting its image, pointing out that the Hong Kong exchange is constantly doing roadshows.

If London does not respond to the competition, it may become only a leading IPO venue, not the leading IPO venue as it is today, he concluded.

The morning sessions also saw presentations on topics including London versus Frankfurt as a listing location, trends in disclosure and guidance, and the implications of the UK’s new Bribery Act.

Russian studies

After lunch, Gazprom’s deputy head of capital markets, Oleg Nagovitsyn, spoke about the value of an annual investor day to the gas giant’s IR program.

He was followed by Anna Batarina, head of IR and capital markets at Uralkali, who explained what role IR played during her company’s $24 bn merger with Silvinit, which was completed in June this year.

Anna Batarina
Anna Batarina, Uralkali

The afternoon also saw talks on Russian depositary receipts and the use of social media and mobile devices for IR.

In the final session, the discussion moved on to the differences between IR in Russia and other countries, particularly in more developed markets like the UK and US.

Tom Blackwell, managing director at M:Communication’s Moscow office, said IR and PR in Russia are far more challenging than in somewhere like the UK, where the key detail is often whether production is up or down by 5 percent.

In Russia, on the other hand, the situations that companies face are more varied and complex, he said, drawing laughs but also nods of agreement from the audience.

Tom Blackwell
From left: Michael Klochkov, Citi; Tom Blackwell, M:Communications; Sam VanDerlip, M:Communications

The conference was sponsored by JP Morgan, Citigate Dewe Rogerson, Ipreo, EquityStory, M:Communications and Citi.

See more photos of the event.

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