About 30 Ukrainian firms to launch IPOs in 2007
About 30 Ukrainian companies from the banking, retail, real estate and food sectors will launch initial public offerings (IPOs) this year, the head of a leading investment bank said on Wednesday.
Tomas Fiala, who heads investment bank Dragon Capital, told Reuters his team had mandates for about 15 IPOs to be listed locally and on foreign exchanges this year. He expected another 15 to be arranged by others.
That compares with about 17 share placements last year and just three in 2005, with the boom fuelled by foreign interest.
\"There will be about 30,\" said Fiala, managing director of Dragon, the country\'s largest stock trader, which also dominates the market in terms of arranging IPOs.
\"The companies which will do IPOs for the first time will raise on average up to $50 million. For those doing it for the second time, the size will be on average between $50-150 million,\" he said in an interview.
Bankers said investment banks ING, UBS, Russia\'s Renaissance and Troika as well as Ukraine\'s Concorde Capital are working to advise on IPO deals.
Ex-Soviet Ukraine lags behind neighbours in Central and Eastern Europe and its financial markets are underdeveloped.
But after pro-Western President Viktor Yushchenko took power in January 2005 after the Orange Revolution, investors put it on their radar. Foreign investments grew and Ukraine saw high-profile foreign buyouts, especially in the banking sector.
\"A barrier was lifted. A green light to invest in Ukraine was given. Investors are coming in. This wave is growing and it is unlikely to be stopped,\" Fiala said.
New inflows boosted Ukraine\'s stock market capitalisation to about $45 billion this year from $30 billion last year. Fiala expected the capitalisation to increase to about $70 billion by the end of the year and liquidity to improve.
\"Western investors account for 75-80 percent of the turnover, but the share of locals is also growing.\"
Fiala\'s team launched 12 placements, raising more than $410 million in 2006.
\"We could have raised more. Our placements were oversubscribed by two to six times,\" he said, smiling and relaxed in his office in a newly-completed city centre building. One wall was covered in awards marking various deals.
\"But the owners want to raise the amount they can digest in a year, for example, and then to do another placement, when the companies will be on a different level... and will be able to raise more money for the same stake.\"
Political uncertainty, however, has left Ukraine unable to deliver on high expectations, with rival politicians locked in a battle over powers and competing policies.
The performance of Ukrainian issuers was also mixed. Shares in Ukrproduct, the first Ukrainian firm to list in London, and real estate firm XXI century, which raised the highest amount so far, sagged after their IPOs in 2005.
Others have fared better.
Shares in food retailer Velyka Kyshenya (Deep Pocket) grew by about 50 percent since the flotation in 2006 while Rodovid bank was up by nearly 70 percent. Both are listed in Ukraine.
Kyshenya is considering a new share issue in London at the end of this year or early 2008, Fiala said. With double-digit annual growth buoyed by rising incomes, the retailer also points to the way the structure of Ukraine\'s economy is changing.
The export-led economy, with steel and chemical exports key, is dominated by heavy industry based on Soviet-era models.
But consumer-related companies created after the collapse of the Soviet Union in 1991 and often run by executives educated to Western standards are leading the IPO pack this year.
Big industrial firms will require more time to come to the market. They are controlled either by the state or wealthy magnates, dubbed \"oligarchs\" by the media.
\"We are unlikely to see such large companies on the market in 2007. It is more likely already in 2008.\"