Russia Has Worst IPO Quarter Since 2004, PBN Says

By Denis Maternovsky

Oct. 2 (Bloomberg) -- Forty-three companies from Russia and the former Soviet Union canceled or postponed initial public offerings so far this year, culminating in the worst quarter for IPOs since at least 2004, according to the PBN Co.

A total of seven IPOs in the first nine months of 2008 raised $1.68 billion, compared with $26.3 billion in 22 IPOs in the same period last year, according to a report by PBN, a communications company that has advised foreign companies investing in Russia including BP Plc and Merrill Lynch & Co..

``Given that market recovery is increasingly improbable through the end of the year, we are unlikely to see more than a handful of IPOs at most - and even that is probably optimistic,'' Peter Necarsulmer, PBN's chairman, said in an e-mailed statement.

Last month, Russia pledged more than $100 billion in emergency funding after closing the stock market for two days as equities plunged and the MosPrime measure of overnight interbank lending rates reached a record. The Micex Index of stocks has lost 47 percent of its value this year, weighed down by Russia's war with Georgia, a plunge in oil prices, and the global credit crisis.

As many as 120 companies in Russia and the Commonwealth of Independent States are planning to sell shares in the next five years, after cancellation or postponement of 43 IPOs this year, Necarsulmer said. Last year, Russian IPOs reached a record, according to PBN.

OAO Acron, Russia's third-largest producer of nitrogen fertilizers, raised $2.7 million in London and Moscow in the third quarter's only IPO by a Russian or CIS company, according to PBN.

This compares with $1 billion in the same period last year, $1.1 billion for the second quarter of 2008, and $556 million in the first three months of this year, according to the report.

To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net