| Other Photos |
 |
|
 |
America Calls Investors to IPOs
U.S. regulators intend to loosen rules for holding initial public offerings on the American market. The Federal Reserve System is dissatisfied that the main part of offerings, including those of Russian companies, are placed in London. Investment bankers say that competition between foreign stock exchanges will be beneficial for Russian companies, especially after British authorities announced stricter requirements for Russian issuers.
Late Wednesday night, Jack Jennings, associate director of banking supervision and regulation for foreign banks, announced at a banking conference in New York that the U.S. Treasury is reconsidering the rules for the conduct of IPOs on the American market. He said that U.S. authorities were ready to put up resistance to the tendency for the main part of placements, including of Russian companies, to take place in London.
This announcement come two weeks after the British Financial Services Authority announced that it would tighten rules for companies in the former Soviet Union conducting IPOs there. The British referred to the poor quality of corporate management in Russian companies, the low level of protection of minority shareholders' rights and their lack of transparency.
Analysts say the timing of the two decisions cannot be coincidental. “The initiative of the British regulators could lead to an increase in IPOs in the United States,” noted Moody's Economy.com economist Chris Lafakis.
At present, issuers entering the foreign market prefer London, since American regulators' requirements for listing are extremely tough. A report prepared by the American Securities and Exchange Commission stated that only 5 percent of the total world volume of IPOs was placed in the U.S. that year. In 2000, the U.S. had a 58-percent share of world IPOs.
There are only five Russian companies listed on the NYSE at present. They are VimpelCom, MTS, Vimm-Bill-Dann, Rostelkom and Mechel. There are 29 Russian companies listed on the LSE and there are at least 20 IPOs planned there. The LSE was the top market in Europe for quantity of placements last year. Nonetheless, transactions worth $100-120 billion are made in the U.S. every day, while that sum does not exceed $40 billion in Great Britain. Capitalization of the American market stands at about $20 trillion. It is $4 trillion in Britain. According to PricewaterhouseCoopers, 653 IPOs worth ˆ65.4 billion were carried out in Europe last year, and 297 of those, worth &euro29.7; were on the LSE. The daily turnover of the securities of Russian companies in London is estimated at $1 billion, while it is about $200 million in New York.
President of Deutsche Bank UFG Ilya Shcherbovich said that “The main reason for the very small number of placements in the U.S. is the excessive turning of the screws by regulators after the big corporate scandals (Enron, WorldCom and others).” Managing director of Troika Dialog Dmitry Kushaev noted that companies that want to place their stock in the U.S. have to present accounting records in the GAAP standard, while London requires IFRS. “That one's simpler,” noted Kushaev. “Not only that, executives who give inaccurate financial information can face criminal charges.” Lafakis added that “Because of the Sarbanes-Oxley Act [which imposes fine fines and criminal liability on incomplete disclosure of information], placement on the NYSE cost 50 percent more than on the LSE.”
The specific measures intended by American authorities are not yet known. Kommersant's inquiry with the Federal Reserve System received no response. The SEC, according to spokesman John Hein “is not prepared to comment on that question.” The LSE is not afraid of competition from American exchanges. LSE press secretary Catherine Mattison told Kommersant that “the possibilities that the exchange offers are unique and we don't think that other exchanges can offer any analogs.” They are certain at the LSE that issuers will continue to choose the LSE because of the more liberal requirements of British legislation, the lower cost of placement and the high liquidity.
If requirements are changed in Britain, the U.S. can count on some new issuers if it takes advantage of the situation. Shcherbovich stated that Russian companies should only win from competition between foreign stock exchanges.” Chief analyst at Renaissance Capital Ovanes Oganisyan explained that “The American market is five times larger than the British by volume. Therefore, issuers have more possibilities.” Lafakis added, “In any case, the LSE will lose several issuers that prefer New York.” Troika Dialog's Kushaev thinks its possible that the U.S. is a little too late. “If the British make their requirements stricter, there are other strong competitors. Like Moscow,” he said.
Nailya Asker-zade
All the Article in Russian as of Apr. 20, 2007
|
|
|
