Expert does not rule out IPO by large state companies in 2025

In Russia in 2025, large state-owned companies and companies with state participation may conduct an initial public offering (IPO), Ruslan Spinka, Director of Sales and Client Services of IC Fontvielle, told Izvestia on December 26.

The expert specified that a total of 14 new companies appeared on the Russian stock market this year: eight placements took place in the first half of the year and six in the second half. According to him, the most popular months for companies were February, July and October - they accounted for a total of nine placements: three for each month.

"Of course, if we compare with 2023, which accounted for eight IPOs, or 2022, in which only one company went public, there is a trend of growth in the number of initial public offerings. However, the boom is still a long way off," Spinka emphasized.

He noted that the tightening of the monetary policy (MP) is having an impact: since the end of July, the Central Bank of the Russian Federation started to raise the key rate from the level of 16% per annum, at which it was kept for the whole first half of the year, gradually bringing it to the level of 21% per annum. At the same time, 11 out of 14 companies entered the stock market at the rate of 16% per annum, while only three offerings took place during the period of tightening of the CBR. Some of the issuers, who planned to enter the stock exchange in the second half of 2024, moved the terms, waiting for more favorable market conditions, explained Spinka.

According to him, the increase in the key rate caused a natural capital flow from equity securities to debt securities, as well as money market instruments. As a result, the Moscow Exchange ruble index sagged by more than 30% by the end of the year from its peak in May 2024. This situation was reflected in the multiples of traded companies.

"New businesses, which are valued similarly to traded issuers, decided to wait for the easing of the DKP, which is usually accompanied by an increase in interest in riskier assets, which include, among others, shares," Spinka emphasized.

In his opinion, the initial public offerings of 2023-2024 highlighted the problem areas that exist in this area. He expressed the view that three things need fine-tuning: transparency of issuers, lockup periods and allocation.

"The regulator is set on solving the existing problems, so I think that in 2025 we are waiting for innovations related to the IPO market. This period of quiescence of initial public offerings is favorable for the creation of clear and transparent rules of the game for all participants in the process. When they are created, and market conditions will allow, I think we will see not only the postponed placements this year, but also those IPOs of large state-owned companies and companies with state participation, which are announced by the Ministry of Finance. We are talking about at least seven approved applicants," the expert added.

He stressed that the development of IPOs fits into the plan to increase the capitalization of the Russian stock market to 66% of GDP by 2030, as the growth in the number of large companies on the stock exchange and in general increase in the number of new names available to investors - one of the most obvious ways to achieve the targets.

In early March, the Russian Central Bank told Izvestia that it proposes to consider tax breaks to provide additional incentives for high-tech companies to enter the stock exchange. In particular, it is a question of corporate income tax exemptions for companies going public; personal income tax exemption for dividends on shares of companies accounted for in IIS-3; personal income tax exemptions for individuals purchasing shares of such companies during initial public offerings on the stock exchange, as well as during offerings on investment platforms.