Demand for shares of the Astra group within the IPO exceeded supply several times

As Kommersant found out, the demand for shares of the Astra group as part of the ongoing IPO has already exceeded supply several times. Not only private but also institutional investors are showing high interest in the securities, which has become rare after the outbreak of hostilities in Ukraine. Portfolio managers are attracted by the company’s prospects against the backdrop of import substitution of software. However, they are ready to buy shares of new issuers only at a significant discount to their trading counterparts.

As sources told Kommersant in the financial market, by mid-week the order book for the IPO of the Astra group was oversubscribed 13 times, mostly at the upper limit of the price range of 300–333 rubles.

The collection of applications ends on October 12, the placement price will be announced on October 13. “Already on Tuesday, the organizers reported that demand exceeded supply five times and continues to grow rapidly every hour,” says one of Kommersant’s interlocutors. According to another source, against the backdrop of high interest from investors, the organizers “immediately focused on the upper limit of the price range.”

Multiple oversubscriptions are not uncommon for Russian IPOs, but all such placements took place before the outbreak of hostilities in Ukraine. In particular, in 2010–2020, during the IPO of Mail.ru, Yandex, TCS Holding, Ozon, the order books were oversubscribed by 5–20 times, and the placement volumes amounted to $1–2 billion. But then, a significant part of the demand was provided by international investors.

This year, Russian companies have already conducted initial public offerings, but more modest ones and aimed primarily at private investors. Thus, in the spring the company “Genetics” was placed (for 179 million rubles), and in the summer – “SmartTechGroup” (978 million rubles, the main asset is the Karmani multifunctional complex, see Kommersant on July 4).

However, according to Kommersant’s information, institutional investors are also actively participating in Astra’s IPO. “All the recent placements were of no interest to us, but we are willing to participate in this one with a fairly large application,” said a portfolio manager of a large management company. General Director of TKB Investment Partners Dmitry Timofeev noted that the company submitted an application from a wide pool of clients.

Market participants view this IPO as an opportunity to purchase securities at a discount to public companies from the IT sector. “Russian state-owned companies are required to switch to Russian software by the end of 2024, which provides an additional incentive for state-owned companies to more quickly purchase products produced by Astra Group of Companies,” notes Ingosstrakh-Investments Management Company analyst Artem Autlev. According to the head of the investment analytics department at Tinkoff Investments, Kirill Komarov, Astra could occupy about 46% of the Russian infrastructure software market by the end of 2030 (currently about 23%).

But the main risk of the issuer, emphasizes the portfolio manager of a large management company, is precisely inflated expectations regarding the rate of business growth. Another problem may be investor dissatisfaction due to rush demand. “Previously, with multiple oversubscriptions, investors who did not receive a share entered the secondary market, which “exploded” it,” notes a portfolio manager of a large management company.

According to a Kommersant source in the financial market, for now the organizers are targeting the distribution of securities in equal proportions between individuals and institutional investors. However, he admits that the issuer may ultimately give greater weight in the allocation to institutions.

By the end of the year, market participants are waiting for new placements, in particular, such plans were announced by Eurotrans, Henderson, Kristall, and possibly an IPO of Sovcombank (see Kommersant on October 5). Of these, Artem Outlev believes that Sovcombank is the most interesting for institutional investors, as a large private bank with strong financial results.

“We make the decision on participation or non-participation based on the final terms of the placement, our assessment of the company, the potential of the business in relation to the risks,” notes portfolio manager of Alfa Capital Management Company Dmitry Scriabin. According to Dmitry Timofeev, the ideal for institutional investors is placement with a discount of 10–20% to peers.

Vitaly Gaidaev