The MICEX Group, operator of the Moscow Exchange is set to go public today in a deal expected to raise around $500 million. Shares have been priced at RUB55/share ($1.83), which will value the company at $4.2 billion.
An IPO has been in the works for the company over the last few years as they have publicly stated their desire to do so. The company is marking the event as an opportunity for the Moscow Exchange to greater establish itself as a global financial player. Specifically in FX trading, the MICEX has had success as a regional power in ruble based derivatives trading. This is has drawn interest from foreign firms seeking to do business in Russia and for traders looking to speculate on the region’s fortunes.
In regards to whether the stock is a good buy, opinion in Russia is mixed. Much of the debate hinges on the autonomy the public company will have and what type of government controls will exist. Investors are calling the stock a play on Russia’s government. If the government becomes a major influencer and controller of the Micex group, then potential appreciation in the stock is expected to be limited. However, if the exchange is allowed to grow uninhibited and continues to leverage its regional prowess as well as fulfill its goal of becoming a central point for Asian (IE-China) and Western trader, traders see lots of upside potential.
In regards to the local market, regardless of government controls, Russian firms servicing the exchange are expected to benefit from the IPO. Existing financial and technology firms are well set to be intermediaries for an increase in foreign investment expected to reach the Moscow Exchange.
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Commenting on the local impact, Michael Berman, Business Development Director, Devexperts stated ”Recently MICEX and RTS were merged into Moscow Exchange, the leading Russian exchange today. Going to IPO was one of their top-priority tasks from Day 1 and now it is successfully accomplished.”
“Thanks to this project Moscow Exchange has aligned RTS and MICEX teams, processes, improved transparency, proved its ability to act efficiently as a single exchange. Looks like these facts may help them to attract new clients and partners as well as undertake new projects.”
At the same time they still have a major challenge in front of them: it is to increase interest from big financial institutions to its platform and services, especially having in mind that many Russian securities are traded on LSE in parallel. One of the measures to ease access to Exchange was a project to facilitate DMA for foreign investors (in 2010) where we helped by providing FIX and FAST gateways to let traders all over the world access exchange liquidity directly. We see the usage of these gateways grows and it is a good sign.”