MOSCOW, Oct 13 (Reuters) - Russian equity capital market deals may expand by roughly one quarter to $2.5 billion next year as investor appetite picks up despite Western sanctions and a sluggish economic recovery, investment bank VTB Capital predicts.
The volume of Russian share placements collapsed in 2014 as the Ukraine conflict escalated, leading some banks to retrench from Russia as asset prices plunged and sanctions made it harder to do business.
Equity capital market (ECM) activity has been slow to recover, but a stabilisation of economic conditions this year and government plans to privatise stakes in several large state firms has raised hopes for a market turnaround.
“Already this year, if we’re talking about the deals that have gone through including the Alrosa privatisation, we have more than $2 billion. And last year it was $1.8 billion,” Dmitry Bolyasnikov, executive director for ECM at VTB Capital, told Reuters.
VTB Capital is part of VTB Group, Russia’s second-largest bank. VTB Group is under Western sanctions over Russia’s role in the Ukraine crisis that restrict its access to international capital.
Bolyasnikov said the roughly $2.5 billion of initial and secondary public offerings by Russian companies that he expects next year includes privatisation deals as well as five to seven companies which are looking at potential listings in Moscow.
His optimism contrasts with more sober comments by Finance Minister Anton Siluanov, who said on Wednesday that Russia did not have ambitious privatisation plans for 2017.
“Investors are becoming more interested in issuers generating stable dividend flows, rather than companies promising fast growth,” Bolyasnikov said.
Russian firms looking at placing shares include oil firm Russneft, while AFK Sistema retains plans for an IPO of its children’s goods retailer Detsky Mir.
Among privatisation deals which could involve selling shares on an exchange there are plans to sell stakes in shipping company Sovcomflot and VTB.
The sale of a 10.9 percent stake in diamond company Alrosa was the only privatisation deal this year that involved placing shares publicly, as opposed to the direct sale of a controlling stake in Bashneft to rival oil producer Rosneft. (Reporting by Olga Popova and Alexander Winning; Editing by Andrey Ostroukh/Keith Weir)