By Jason Corcoran in Moscow
The London Stock Exchange believes dual Russian stock listings in Moscow and London will endure in spite of plans to curb the amount firms can sell overseas.
The new rules, which are due to come into force from January 1, aim to restrict domestic companies from running to foreign exchanges by retaining fresh equity issuance for domestic bourses. The controversial new rules on stock floats would effectively limit initial public offerings on foreign markets to 5% of the company.
But Jon Edwards, director at the LSE responsible for Russia and the CIS, told EmergingMarkets.me he is convinced there will be a future for dual IPOs and dual listings. He said: “It’s too early to comment on the new listing rules. The proof will be in their implementation but I think are so many bridges built between the City and the Russian capital markets that we will continue to see companies complement their domestic share listings with GDR listings in London.”
Edwards was speaking ahead of an conference organised by Belgian bank KBC in London tomorrow featuring Russia’s booming agricultural and consumer retailer sectors. A number of leading Russian and CIS companies are to participate, including X5, Magnit, Dixy, Russian Grain, MHP, Cherkizova and Wimm Bill Dann.
Edwards, who travels extensively across Russia and the CIS for the LSE, said the sector had one of the most sought after by investors prior to the economic crisis last year.
He added: “Food and agriculture was a hot sector before the crisis and now with the economy showing signs of recovery it is once again generating considerable interest. Over the last year the Exchange has run a number of events for the Agribusiness sector for companies from the CIS and Latin America. One of our aims is to showcase the Agribusiness knowledge and experience which international companies can tap in London.
The conference, ‘The Food Chain – Russia & CIS’ will take place at KBC’s offices on 111 Old Broad Street in London. The forum is organized by Celine Gallagher who joined KBC group a year ago and has a long track record in Russian and CIS capital markets.
Edwards said recent moves by the Russian government to develop their market institutions and to improve domestic liquidity was understandable. The LSE and Russia’s rouble-denominated MICEX have a successful record of cooperating through a joint marketing agreement set up in 2006 to promote joint IPOs on their respective markets.
He said: “Russia’s interest in developing its own market institutions is understandable . At the same time there is an appreciation by Russia n companies of the need to access different pools of liquidity .
The two exchanges in Moscow have clawed back their lead in Russian equity trading surrendered to the LSE following the many suspensions and closures last year in the wake of the banking crisis and Russia’s war with Georgia.
Edwards said the balance between the two markets had been restored after many foreign investors turned to trading Russian global depositary receipts in London last year.
He added: “ We now essentially see the equilibrium that existed between the markets before the crisis with trading on Russian exchanges recovering quickly following the trading suspensions at the end of last year .”
The LSE has ten Russian brokers who are fully licensed to operate on its exchange.
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