Mosgorlombard reduces the price and extends the period for placement of shares as part of the IPO

Mosgorlombard (MGKL) postponed the collection of the IPO book for the second time and reduced the offering price range by more than 20%. Market participants believe that the company will still not be able to attract the required amount of funds. Analysts consider it logical in such a situation to generally postpone the IPO. But they admit that next year the market situation may not be conducive to placement.

MGKL was supposed to complete the collection of applications for the IPO on December 21, but instead announced a change in the date of placement of securities – now it will take place from December 28, 2023 to January 15, 2024. Last week the company already extended the collection of applications (see “Kommersant” dated December 12). Moreover, the company’s board of directors reduced the initial range for placement of shares from 3.1–3.55 to 2.5–2.55 rubles, increasing the maximum number of securities to be placed from 322.58 million to 329.16 million.

Long-term placements that took even several months (for example, Eurotrans) rarely occurred on the Russian market. However, experts cannot remember any examples of the issuer rescheduling the deadline twice.

The press service of Mosgorlombard told Kommersant that “the collected volume of applications does not allow us to talk about achieving the goals of the transaction,” and the purpose of changing the parameters is to “ensure that the largest possible number of investors take part in the IPO and increase the growth potential of the shares company.” Initially, MGKL planned to raise 0.5–1 billion rubles.

Experts consider the assessment of MGCL to be overestimated. According to the initial price corridor, the ratio of share price to earnings per share (p/e) exceeded 20, notes managing director of Ivolga Capital Dmitry Alexandrov. For comparison, the p/e of the Moscow Exchange is 8, Sberbank – 4, Sovcombank – 2, the expert explains. Mr. Alexandrov believes that such an assessment of MGKL is “incredibly expensive for the current market,” and given that the company has extended the collection of applications for the second time, “apparently, even retail investors are not ready to go into this placement en masse.” Two interlocutors of Kommersant in the financial market note that institutional investors did not show interest in Mosgorlombard’s securities.

According to the strategist of Arikapital Management Company Sergei Suverov, the company raised funds for a clear goal – the implementation of a strategy for further development, “therefore, it is obvious that they collected the amount that does not allow this goal to be achieved.” Therefore, they decided to restart the book collection by offering a discount, the expert believes.

The time for placement is no longer so favorable: investor activity generally decreases towards the end of the year, and interest rates are now at their peak after the December increase in the Central Bank’s key rate, adds Albert Koroev, head of the stock market experts department at BCS World of Investments.

According to the Central Bank, in November the growth of household funds in Russian banks accelerated to 2.1% compared to 1.4% in October. At the same time, balances on ruble accounts increased by 851 billion rubles. At the same time, the Moscow Exchange index has remained in a rather narrow range since the beginning of August – 3000-3250 points – without a hint of an upward trend.

Usually, if demand is weak, IPOs are postponed for a year, or even a couple of years, notes Alexey Kurasov, head of the corporate finance department of the Financial Group Finam. However, one of the portfolio managers clarifies, “there are no guarantees that the situation will be better later.” The situation when individuals lose interest in investments may continue next year until deposit rates begin to decline, “and therefore postponing the placement will not solve the problem,” agrees Kommersant’s interlocutor on the stock market.

According to statistics from Russian IPOs, out of a dozen and a half canceled placements, only in three cases did companies subsequently implement their plans.

The reason why the company does not cancel the IPO “may be related to some obligations of shareholders,” believes one of Kommersant’s interlocutors. Independent financial analyst Andrei Barkhota believes that Mosgorlombard “really needs capital to expand infrastructure and gain a monopoly position in the market.”

Ksenia Kulikova, Polina Trifonova, Vitaly Gaidaev