As Russian Firms List Abroad, Is Now the Time to Invest?
The listing of Russia’ largest bank Sberbank on the London Stock Exchange, raising some $5 billion, is just the beginning of a wider trend and shows how Russian state-owned businesses are increasingly turning towards privatization, Anton Karamzin, deputy chairman and CFO of Sberbank, told CNBC.
Sberbank’s listing “opens up the markets for other Russian companies who can now be perceived in a positive context if they want to raise capital internationally,” Karamzin said. “Market conditions are conducive to it.”
Sberbank’s listing is seen as a cornerstone of Russia’s privatization program and will allow investors to tap into one of the world’s biggest banks, which holds $405 billion in assets and made a net profit of $10 billion last year.
Russia’s central bank is Sberbank’s majority shareholder and its sale of a 7.6 percent stake in the bank brings the central bank’s ownership down to 50 percent plus one share.
Charles Robertson, global chief economist at Renaissance Capital, told CNBC earlier this month that Sberbank’s public offering was part of a trend, with investors attracted to foreign markets due to the lack of liquidity in Moscow.
Russia’s President Vladimir Putin is aiming to open up domestic businesses to foreign investors in a bid to bring his country’s economy up to the number five spot globally.
Russian trade minister Andrei Slepnev told CNBC that “Russia is a very difficult place [to do business], but a very profitable place,” and that the government is doing its best to achieve Putin’s goals.
Although Russia’s 4.3 percent real GDP growth is not as high as in other emerging economies, its economy is not “overheated,” and “much better than most of the developed markets,” Karamzin said.
Director of London & Capital Ashok Shah told CNBC that Russia’s growth prospects at the moment are “as good as it gets.”
“Russia is one of the few places in the world where interest rates remain reasonably stable,” Shah said, but warned that political risk premium will remain high for a considerable amount of time to come.
Russia’s debt to GDP ratio stands at around 9 percent for 2011 and has decreased significantly since 1998 when it was 180 percent. In the European Union, 14 out of 27 countries had public debt exceeding 60 percent of their GDP at the end of 2010, according to Eurostat statistics.