Shares of Yuzhuralzoloto (UGK) on the Moscow Exchange after the IPO showed negative dynamics

On the first day of trading in shares of the gold mining company Yuzhuralzoloto after the IPO that took place the day before, they showed a slight increase in quotations. In the last two months, there have been four initial offerings, and only in two cases the result of secondary trading was positive for investors. The dynamics of the movement of quotes in the first days of trading are determined not only by the financial results of companies and the prospects of the sector, but also by the ability of issuers and organizers to attract institutional investors. Including a noticeable discount to the market price.

As market participants expected (see “Kommersant” dated November 22), on the first day of secondary exchange trading, shares of the Yuzhuralzoloto (UGK) company increased compared to the IPO price (55 kopecks). At the beginning of the day, stock quotes rose by 16%, to 64 kopecks. But it was not possible to stay at this level, and the price at the close of trading was 57 kopecks, only 4% higher than the offering price.

Thus, SGC shares failed to repeat the success of the shares of the Astra group placed a month ago, which on the first day rose by 40% compared to the placement price. However, the other two IPOs – Henderson (see “Kommersant” dated November 3) and Eurotrans – pleased investors much less. In particular, Henderson shares lost only 0.7% in price on the first day of trading, but are currently trading 15% below the initial offering price. Eurotrans shares lost 11%.

The dynamics of shares after the IPO depends on many factors, experts explain. First of all, according to Tatyana Simonova, portfolio manager for Russian shares of General Invest, these are the growth prospects of the company itself, the prospects of the sector it represents, the size of the company, as well as the activity of the issuer itself and the IPO organizers. In particular, the Astra group and YuGK (with a capitalization of more than 100 billion rubles), according to the head of the corporate finance department of the Financial Group Finam Alexey Kurasov, attracted more than ten banks and brokers to the placement.

As a result, they generated “strong demand from both individuals and institutional investors and high-net-worth clients.”

The order book for Astra was oversubscribed by more than 20 times, as investors have a positive attitude towards the IT sector, says Daniil Bolotskikh, leading analyst at Digital Broker. And the greater the oversubscription for the securities offered for placement, the stronger the demand at the start of trading, notes Vasily Karpunin, head of the information and analytical content department at BCS World of Investments.

At the same time, the placement of Henderson shares was initially carried out with a small retail syndicate of three brokers, only then one large bank was added, notes Alexey Kurasov. And, according to him, the demand was only retail. Eurotrans shares were also bought only by retail clients, the expert notes. Moreover, according to the Moscow Exchange, the volume amounted to only 615 million rubles. “Speculators began to actively exit, without waiting for over-the-counter investors to come to the market, who bought securities worth 12.8 billion rubles,” says Mr. Kurasov.

Tatyana Simonova notes that at the first secondary auction it is also important to have the potential for growth of quotes relative to the offering price.

In particular, SGC shares were placed at the lower limit of the announced range, although the order book was oversubscribed by more than three times.

Despite the fact that Astra shares were offered by existing shareholders (that is, those attracted did not go to the company, the so-called cashout), they offered a “fair and open deal” and gave a discount, notes Alexey Kurasov. At the same time, Henderson placed an additional issue of shares (the so-called cash), but immediately announced the payment of dividends (that is, payments to the majority shareholder with an 85% stake and with a small cashback for investors in the IPO) and did not give any discount for participation in the initial placement, the expert notes. Eurotrans announced a price many times higher than investors’ expectations and focused on large dividends in the future, but this idea did not find interest among investors, Mr. Kurasov points out.

In the future, trading in new securities will retain placement risks, analysts say. “The absence of institutional participants in the transaction leads to inflated valuations, since retail investors, as a rule, participate at any price and do not have the resources to qualitatively evaluate the issuer,” says Alexey Kurasov.

Ksenia Kulikova