You're reading: IPO market for Ukrainian companies closed, investors go to ‘serene harbors’

Investors at present are not interested in initial public offerings (IPOs), as they mainly focus on the protection of investment, according to experts who took part in the third Ukrainian Investment Forum in Kyiv.

A partner of East Capital, Aivaras Abromavicius, said that an absence
of interest in IPOs is seen not only with Ukrainian issuers, but the
companies from other countries, as quotations of the shares that have
already been listed on exchanges have plunged to the lowest limits.

“Why do investors not need IPOs? – The shares are cheap. Clients want
cash and bonds, and they don’t want to actively invest in shares due to
the uncertain situation in the world,” he said.

He said that the situation could change with growth of inflation and growth of all interest rates.

The head of the investment and banking services department at
Concorde Capital Investment Company, Vitaliy Strukov, said that the fall
in quotations also affected public companies with the clear history of
success, in particular, Kernel, which was earlier listed with
capitalization of 8-9 EBITDA, at present has seen it fall to 4.5 EBITDA.

“If we add the 15-20% discount to the indicator that is asked for by
investors for new companies, their value will total around 4 EBITDA,
which on other hand is not attractive to the owners of such companies,”
Strukov said.

As for Ukrainian issuers, Abromavicius also said that many IPOs were
conducted at overestimated prices on overly optimistic expectations of
the country’s economic development.

“Taking into account the fact that not all expectations were
justifiable, investors would like to see a certain field for actions:
the development of the capital market and the protection of rights of
minority shareholders, which is absent here at present,” he added.

He said that if demand restores, it would first focus on companies
that sell their products on the domestic market, in particular, in the
retail and foodstuff production areas, for example, Myronivsky
Hliboproduct.

Strukov said that Ukrainian companies should take into account the
length of the preparation for an IPO – not months, but years, and today
one can forget about such notions as “windows” and a “favorable
situation.”

As reported, WSE CEO Ludwik Sobolewski earlier said that about five
IPOs are to come from Ukraine in 2012. Only KDM Shipping Public Ltd
(Cyprus) managed to place its shares this year.

The WSE is a marketplace for 12 Ukrainian companies: 11 are listed on its main floor, and one is on the alternative NewConnect.