Three of Russia's five IKEA stores are located in Moscow
This summer Russia surpassed Saudi Arabia as the world's largest oil producer, according to official production figures reported recently by the UK Financial Times, the New York Times, and several other Western media outlets. This surge in energy production has coincided with Russia's emergence as one of the world's leading emerging markets, attracting major investment funds such as Morgan Stanley Capital International and the Vanguard Group.
There is much more to the Russian economy, however, than just the oil and gas boom. While fossil fuels and raw metals will still account for majority of Russian IPO shares issued in 2006-2007, Russia's largest companies involved in auto and truck manufacturing, steelmaking, electric power grid, telecommunications, and retail are also opening up to foreign investors.
Click on the extended post to read the MosNews story about the next phase of foreign investment in Russia.
Over 40 Russian Companies Plan IPOs for 2006-2007 -- Expert
Created: 11.09.2006 17:34 MSK (GMT +3)
MosNews
More than 40 Russian companies are planning to conduct initial public offers of their shares in 2006-2007, Ruben Vardanyan, chairman of the board of Troika Dialog investment group, said on Monday, Sept. 11. Vardanyan was speaking at investment forum in Kazan, capital of Russian republic of Tatarstan.
The expert said that over a dozen Russian companies floated their shares for the first time in 2004-2005, increasing the country's stock market capitalization from $200 billion in 2004 to $700 billion in 2006.
Mobile TeleSystems (MTS), the largest mobile phone operator in Russia and Eastern Europe, completed its IPO in 2000 and has been floating its shares on the Russian stock market since 2003. But the real boom on the IPO market began in 2004, with IPOs conducted by Mechel steel group and Sedmoi Continent, Russia's biggest retailer.
State-owned Rosneft Oil Company held the largest IPO in Russia's corporate history, and the world's fifth biggest, this summer. The state-owned crude producer made a $10.4 billion debut on trading floors in the Russian and British capitals.
"In 2006-2007, we are expecting more than 40 IPOs," Vardanyan told the forum of investors.
A number of major Russian companies, including truck maker Kamaz, steelmaker Severstal, independent natural gas producer Itera and the capital's electricity producer, Mosenergo, recently said they were considering IPO plans.
Unified Energy System, Russia's power grid monopoly, hopes to raise $4-6.7 billion during an initial public offering of its five generating companies that will be held in November 2006-July 2007, the company's chief executive, Anatoly Chubais, said in July.
Vardanyan said leading investment banks are forecasting a 10-fold growth in Russian GDP by 2050 (from 2005), making Russia one of the top 10 countries with the highest investment attractiveness.
"Russia is in second place after China on the list of countries where foreign investors would like to open representative offices," he said, quoted by RIA Novosti.
How trustworthy are these IPO offerings? Are they true shares in legitimate, stable companies? Is there a representative in the US?
Can I get rich quick??!
You have to take in consideration that methods used by Kremlin are _very_ questionable. Two major risks about russians companies are:
1) Political risks - the more relations company has with Kremlin, the more political risks involved. If next govmnt won't be under Putin's control (what's highly improbable but still possible) - they will get BIG troubles. That's why buying Rosneft is really bad idea, imho
2) Economical risks linked to specific of oil state. Russian economic relies entirely on oil prices... So if oil prices will fall, russian quick emerging market will die even faster.
Yay! My friend is one of the general managers of Ikea in Russia, he recently oversaw the opening of the Ikea-owned MegaMall in Kazan. The criteria is that if a city has more than a million inhabitants, Ikea will open there.
Yuzhno-Sakhalinsk sadly has only about 200,000.