IPO boom in Russia: effect on capital markets

Credit rating agency Expert RA has released a study entitled "IPO Boom in Russia: Effect on Capital Markets", according to which the growth in liquidity in 2023 has led to a renaissance in the IPO market and a record in the public debt market.

Current trends in the debt and equity finance markets allow us to draw the following conclusions about the development of these markets in the near term:

- The main driving force behind IPOs is liquidity, largely fuelled by retail investors, further enhanced by companies' lack of foreign borrowing capacity and government support. There is every reason to believe that the situation of increased demand for initial public offerings will continue in the near term.
- Bonds are not a competitor to initial public offerings in the fight for liquidity. These instruments are designed for different categories of investors with different risk profiles. The main competitor to bond investments is bank deposits, while investments in IPOs are preferred by speculation supporters.
- On the business side, bond issues and initial public offerings are not competitors, but are different ways of raising capital and achieving an optimal capital structure.
- In most cases, companies prefer to go public before going public by obtaining a credit rating and issuing bond issues, which further simplifies the initial public offering process.
- Obtaining a credit rating is an important stage of third-party verification of a company's creditworthiness and a significant part of its public positioning.
- In the process of preparing for the issue of securities, a business should implement a number of procedures, ranging from improving corporate procedures and passing a quality audit, to obtaining a credit rating and competent IR positioning in the market. These steps are described in more detail in the attached chart "Roadmap to an IPO for mid- and small-capitalisation companies"

Read more: https://raexpert.ru/researches/ua/debt_market_2024/#part6