A top IPO banker in Moscow fears it will be decades before he sees another listing: 'We're in a new world'

• A leading IPO banker in Moscow claimed it may be decades before the market witnesses another Russian listing.
• Last year was "sensational," but the next IPO may not be "until my future grandchildren's lifetime," he told Insider.

A leading IPO banker in Moscow claimed it may be decades before the market witnesses another Russian equity listing.

"The next Russian IPO may be decades away in my future grandchildren's lifetime," said the banker, who declined to be named for fear of losing his job. "All I know for certain is that it won't be for a long while. We are now in a new world. Nobody knows what the fuck is happening, and we don't even know when the equity market is going to open here."

Russia last year enjoyed its biggest boom in stock market debuts in a decade. Listings rebounded spectacularly after a lull caused by Western sanctions imposed on the Kremlin for its annexation of Crimea in 2014 and alleged interference in the 2016 US election.

"After the horror show of Crimea, it took us a few years before we could even consider taking a company on a roadshow," the banker, who worked on the largest Russian IPOs last year, told Insider. "This is tracking much worse now, so it might be a good few years before we can even think about any plans."

Russian companies attracted more than $7 billion in IPOs and secondary listings in Moscow, New York, and London last year, the most since 2011, according to data compiled by Reuters. The IPO bonanza started in November 2020 when "Russia's Amazon," Ozon, tapped into the deep pool of US tech investors by raising $1.2 billion on the Nasdaq.

Four companies listed in the autumn of last year alone. In November, SPB Exchange, Russia's second-largest stock exchange, raked in around $175 million in an IPO on its own platform. Real estate database Cian also raised more than $290 million in a listing on the New York Stock Exchange. IT company Softline attracted $400 million in a London debut in October, shortly after Renaissance Insurance had raised $250 million in Moscow.

"Last year was sensational for us," said the Moscow banker, who worked on several of the biggest deals. "We hadn't seen bonuses like it since the huge Russian IPO deals before the 2008 crash."

In the first half of 2021, three companies completed market debuts. Cut-price retailer Fix Price's dual listing in London and Moscow raised almost $2 billion in March, making it the biggest Russian listing since Western sanctions were introduced in 2014. Forest group Segekha and private healthcare provider EMC raised $402 million and $500 million, respectively, in Moscow.

Before the invasion of Ukraine, optimism had been high

Prior to Russia's invasion of Ukraine on February 24, bankers had been looking forward to another bumper year.

Russia's petrochemical giant Sibur and metal and mining group Metalloinvest were among ten companies firmly in the pipeline for 2022. Both Sibur and Metalloinvest had been valued in excess of $20 billion by investment bankers.

The Moscow Exchange, Russia's leading stock exchange, has been closed since the invasion started on February 24 after shares and the rouble went into freefall after widespread Western sanctions were imposed. A sovereign default of foreign debt was avoided after Russia made payments worth $117 million.

The Moscow Exchange reopened for business on Monday, but only for limited trading in local rouble-denominated bonds. Trading in equities may resume later this week.

Meanwhile, the London shares of blue-chip stocks Sberbank and energy monopoly Gazprom have fallen by 96% and 90%, respectively.

Fears — and hopes — for what's next

Market insiders fear the Moscow shares will be blown away when the stock exchange reopens, even if the Kremlin turns on the firehose from its $122 billion National Wealth Fund (NWF) "rainy day fund."

"Some of the investment banks and hedge funds will try to figure out how to make money, but the whole place is fundamentally at zero and shorting is banned," said a senior Russian equity trader, who declined to be named for fear of losing his job.

A Moscow-based equity analyst said the performance of Russian metal and mining companies listed in London has offered hope. Polymetal, the gold and silver producer, has rallied by 60% while Evraz, a steelmaker and Petropavlovsk, a gold miner, have climbed 30 to 40% from their lows.

"The rumor is that money from China and the Middle East is ready to go to pick up assets at distressed levels, but we won't know until the market opens," said the equity analyst.

One leading brokerage is already on the verge of collapse and traders fear that several other independent players will go under.

Sova Capital Limited, a brokerage owned by Russian banker Roman Avdeev, appointed special administrators on March 3 to help them fulfill commitments to clients and counterparties.

French bank BNP Paribas on Monday announced it was suspending operations in Russia, joining an exodus that includes Goldman Sachs, JP Morgan, and Deutsche Bank.

Anonymous, an international hacker collective, declared it was giving Western companies still active in Russia 48 hours to leave. Those companies include Citi and Austria's Raiffeisen Bank, one of the biggest foreign lenders in Russia.