Why Not All IPOs Are Identically Profitable? The most successful and unsuccessful placements of shares on the stock exchange

Why Not All IPOs Are Identically Profitable? The most successful and unsuccessful placements of shares on the stock exchange

2020 a difficult year for those on the market. He then fell under the pressure of panic, then soared on a wave of euphoria. About 5 million new financiers came to the exchange, creating a suitable background for IPOs (IPO).

As well as, last year there was a reduction in the main rate, what made bank deposits an unprofitable inventory, because the securities market has become a good alternative. For 2020 G. nine new Russian issuers emerged, who entered the market through IPO. With all this with 2015 on 2019 yy. as a result, there was 18 new companies, better known among them: TCS Group, X5 Retail Group, RUSAL and Detsky Mir.

What is a similar IPO?

Initial Public Offering (IPO) – the initial public arrangement of shares on the stock exchange, as a result of which the company becomes recognizable, also attracts money.

With all this, financiers receive securities of the organization among the first and most often with a discount to the cost of location.. But, despite the discount, the acquisition of assets through an IPO incurs huge costs within itself - payment of broker commissions, depository and tax payments. This amount can reach 6-seven percent of the contract amount.

At 1st hours, when there is an overstated demand, rising prices can make up for all costs and bring significant profits. But this profit is unrealistic to fix, for the reason that, that the organizers set a lock-up period, or the period of the superimposed block (3–6 months), when shares cannot be sold, acquired in the process of disposition. This is done for the purpose, to exclude manipulation by serious participants.

All Russian shares went through the IPO function and ended up on the MICEX thanks to the initial placement or listing.

Top most unsuccessful IPOs

1. People's IPO: VTB

In May 2007 G. had to pass "the most successful placement of shares among Russian retail financiers", but the “popular” IPO turned into a nightmare.

  Panic on Youtube.

Due to aggressive marketing to the media, the fifth share of VTB Bank's securities was acquired by individuals.

Location went by cost 13,6 pennies per share, after that, in the 1st days of trading, the paper increased by 28,7 %, setting the maximum at mark 17,49 Kopeks. After which the stock began to decline, dropping eighty-nine percent from the highest-ever values.

Rice. 1. Shares of VTB Bank on the Moscow Exchange 2008–2020. Rice. 1. Shares of VTB Bank on the Moscow Exchange 2008–2020.

Low value for the results of the crisis 2009 G. — 1,9 pennies per share. The prerequisite for such a pronounced decline in value was the constant dilution of securities due to SPO. (secondary stock arrangement) and crisis 2009 G.

And yet the crisis has long been behind., and the characteristics of the bank have good dynamics, the price of its shares so far is below the price of its location.

This story ended well only for some of the financiers., having presented?? its shares for current acquisition in 2012 G. But not everyone was satisfied with the acquisition., for the reason that, that its largest amount was 500 thousand. rub. on the 1st shareholder and paid, only if the financier waited out the entire five-year drawdown.

2. Traditional IPO: "Obuv RF"

Obuv RF IPO was the first placement of securities of a small capitalization organization, in which approximately 75% foreign financiers. Ultimately, the company managed to attract 5,9 billion rubles. with annual revenue in 11 billion rubles.

Location went by cost 140 rub. per share, and already in the 1st hours the paper increased to 180 rub. But then the action for 3 year decreased in 7 once - to 25,6 rub.

Rice. 2. Shares of PJSC Obuv RF at the Moscow Exchange 2018–2022. Rice. 2. Shares of PJSC Obuv RF at the Moscow Exchange 2018–2022.

The reasons for the negative dynamics were unfavorable market conditions and ineffective management of the company. (with the proceeds 5,9 RUB billion. more 5 billion went to increase reserves, while revenue grew by only 8,5%, and the debt load in the amount 7 billion decreased by only 500 RUB million).

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3. "LSR Group": at the wrong time, in the wrong place

Another failed IPO was the placement of LSR Group. The history of quotations is similar to the history of VTB, however, in this case, the reason for the decline was the crisis 2008 G., and a combination of several factors.

  • Decline in the purchasing power of the population.
  • Devaluation of the ruble. With a high debt load, this was critical - the amount of net debt in relation to the amount of assets was 72% based on the results of 2007 G.
  • Growth in the cost of export materials.

Rice. 3. Shares of PJSC LSR Group at the Moscow Exchange 2008–2020. Rice. 3. Shares of PJSC LSR Group at the Moscow Exchange 2008–2020.

IN 2009 G. the company's shares have partially recovered their losses and are still trading at these values.

Top most profitable IPOs

It is difficult to single out the most profitable IPOs on the Russian market, since most companies, whose shares are traded on the Moscow Exchange, significantly grown. For example, Sberbank has grown from 55 kopecks to 300 rub. Therefore, only the loudest stories will be considered..

1. TCS Group

In this case, the IPO took place on the London Stock Exchange. (LSE), and the Listing of Global Depositary Receipts was held on the Moscow Exchange (GDR).

If you do not take into account the decline in the price of shares during the first wave of coronavirus, since the listing, the bank's securities have grown by more than 3,5 Times.

Rice. 4. GDR TCS Group at the Moscow Exchange 2020–2021. Rice. 4. GDR TCS Group at the Moscow Exchange 2020–2021.

The key to success is having your own ecosystem, high growth rates of revenue and profit, as well as a high return on equity - 40% by the end of last year.

2. Ozone: most successful IPO 2020 of the year

Ozon IPO can be called the most successful IPO 2020 G. It took place on the American stock exchange NASDAQ and on the Moscow Exchange there was a simultaneous listing of depositary receipts (ADR).

Placed Ozon at the most favorable time: during the acute phase of the pandemic, the shares of all retailers were in high demand, and online trading (e-commerce) was at the top of demand, especially during lockdown. As a result, on the first day of trading, Ozon rose by 41% higher than the placement price, and the closing of the first day of trading was held with +34%.

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But the company's shares did not stop there and have added more than 90%.

Rice. 5. ADR Ozone at Mosbirge 2020–2021. Rice. 5. ADR Ozone at Mosbirge 2020–2021.

3. Samolet Group of Companies

Samolet Group of Companies became another lucky one, who chose the right time for an IPO. Only the growth was not driven by the pandemic and lockdowns., and a significant reduction in the key rate and preferential mortgage, against the background of which the demand for real estate has increased, and then the prices.

An additional driver was the transition to escrow accounts, That, contrary to expectations, turned out to be an advantage, and not an obstacle for developers.

Earlier when using an equity participation agreement (DDU) developers were forced to sell real estate in the early stages, reducing profits. Now developers use their own or borrowed funds, selling real estate in the later stages, thereby maximizing your profit.

Rice. 6. Shares of GC "Samolet" at the Moscow Exchange 2020–2021. Rice. 6. Shares of GC "Samolet" at the Moscow Exchange 2020–2021.

Expected IPOs 2021 of the year

Last year, a number of IPOs were canceled due to unfavorable conditions., however, this year's failed plans may be realized..

Among the confirmed IPOs it is worth highlighting Fix Price and Segezha Group, which have already been posted. On the way more "Compare.ru" and "VkusVill". except them, they are trying to enter the market:

  • SIBUR,
  • "Victory",
  • Yandex.Taxi,
  • Gett,
  • Sovcombank,
  • Medsey,
  • "Steppe",
  • Binnofarm.

Investors still have the opportunity to participate in the IPO, however, do not rely only on analysts' forecasts, and it is better to independently study the public reporting of companies.

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