Issuers that conducted IPOs in 2022–2023 will organize secondary offerings of shares
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Issuers who conducted IPOs in 2022–2023 are already approaching investors again for a new portion of money by organizing secondary offerings of shares. In some cases, this is facilitated by a significant increase in quotes after the initial offering. In the Russian market, “a new tactic is being formed,” brokers note, an IPO of a small share of shares is held at a discount to the fair price, and then, when investors have already tried the instrument, they are ready to buy securities at a much higher price.
On April 15, Astra Group announced the start of a secondary public offering (SPO) of the company’s shares. The collection of applications will last until April 18. As part of the offer, the group’s main shareholder will offer 10.5–21 million shares (5–10% of the total). Taking into account the fact that the price will not exceed 620 rubles. per share, a shareholder can raise up to 6.5–13 billion rubles, that is, 1.8–3.7 times more than the IPO volume (see “Kommersant” dated October 17, 2023). The company’s shares are now trading more than 80% above the initial offering price.
Typically, an issuer conducts an SPO in cases where a business requires liquid funds for the development of the company, for example, when a new project or merger and acquisition transaction is planned, states Evgeniy Shatov, partner at Capital Lab. In addition, he said, majority shareholders may want to lock in profits by selling part of their stake. “In the case of the Astra group, the sale of 5% of the shares will allow the company to qualify for entry into the first level of listing of the Moscow Exchange, and in the case of the sale of 10%, for entry into the MOEX index,” notes Mr. Shatov.
Among the companies going public in 2022–2023, a number of issuers are already conducting or planning secondary offerings. In particular, one of the shareholders of Eurotrans began offering investors shares of the company at 250 rubles last week. (current market value is slightly lower). As part of the offer, IPO participants who owned shares of the company as of January 15 can buy securities. Sovcombank is preparing an additional issue of shares for the takeover of HKF-Bank (see Kommersant of February 17). Despite the fact that there are more shares, investors reacted positively to the news, and quotes did not decline. “Probably, this was influenced by the statements of the owners, who promised an increase in profits thanks to the deal,” says Andrey Vanin, head of the financial market analytics and premium services department of the Gazprombank Investments service.
Diasoft announced its intention to hold an SPO in the next two years. Last year, SPOs of issuers that had previously entered the stock market took place—Softline, Inarktika, UWC, TMK, VTB, and the Positive group. Here too, either the shareholders sold shares or the issuer raised funds for the business.
The placement price of Astra Group shares was very interesting for investors; it was assessed at a significant discount to fair value, noted Artem Outlev, an analyst at Ingosstrakh-Investments Management Company. Now, in his opinion, the shares are trading “slightly above the fair price.”
During the initial public offering at current prices, the IPO “would hardly have been so successful, and, of course, investors would not have been able to earn such high returns,” Mr. Outlev believes. When entering the IPO, the Astra Group “openly said that this was the company’s first entry into the market and that they were counting on an SPO,” clarifies Mikhail Nesterov, head of the analytical department of TKB Investment Partners: “Thus, the plan of the selling shareholders was fully justified “
“A new tactic is being formed in the Russian market – entering an IPO with a small volume, creating a stir at a low valuation, and then after capitalization grows, an additional placement at a high cost,” notes the Go Invest company. Its analysts admit that some issuers, whose shares have recently grown confidently after the IPO, may also conduct an SPO after the completion of the lock-up periods. In particular, half of the 12 issuers that conducted initial public offerings in 2022–2024 currently trade at 1.4–2.8 times their IPO price.
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