IPO
The MICEX SE offers all its clients a special procedure for offering shares on the exchange, which takes the company’s goals into account as much as possible.
Methods of Stock Floatation
The first method (classic IPO): public offering of a new issue of stock, which includes the following stages:
- Deliberation on the floatation of securities;
- Approval of the issue decision (additional issue);
- State registration of the issue (additional issue);
- Floatation of issued securities;
- State registration of the report on the results of the additional issue of securities or sending the notification on the results of securities’ issue (additional issue)1.
1 Since the Quote Lists “В” and “I” debuted in 2006, it is possible to accept shares of issuers for circulation on the Stock Exchange without waiting for the state registration of the report on the results of the issue (the issuer only sends the notification on the issue’s results to the FSSM)
Determination of the Price During Initial Offering:
According to Russian law, the stock offering price can be determined:
- Before the start of the preemptive right period, the final offering price shall not be more than 10% different than the initial price, (the duration of the preemptive right is 45 days);
- During IPO and after the end of the preemptive right period (the duration of the preemptive right is 20 days).
The second method (SPO) is the offering of holdings of registered stock on the open market.
This method presupposes the state registration of the issue (additional issue) of securities and the registered offering of the securities’ circulation.
Basic stages:
- Accumulation of the holdings of registered stock by the company’s owners that are intended for sale (off the MICEX Stock Exchange);
- Formation of the client’s base of investors, collection of preliminary applications for purchase (participation of the MICEX Stock Exchange is possible);
- Company’s determination of the offering price;
- Trades on the MICEX Stock Exchange of the sale of stock to investors;
- Settlements and remittance of monetary assets from the IPO.
The third, combined method of floatation, which is a type of SWAP operation, makes it possible to avoid offering to existing shareholders, and is intended for IPO.
In each method of floatation the MICEX Stock Exchange offers a number of opportunities for collecting exchange applications when issuing an IPO:
- Collection of applications in a special mode with mandatory consignation of monetary assets by investors (performed at the initial offering of shares of RBK OJSC);
- Collection of applications from buyers not provided with monetary assets in NBM with further entry of orders to execute trades by investors (performed at the initial offering of shares of Kalina OJSC);
- Collection of individual quotes to determine the offering price by the client with further collection of investors’ applications to execute trades for the purchase of the offered shares in NBM or in the anonymous trading mode.
Key Steps for Issuing an IPO
This is the procedure when offering securities through Quote List “В” and conducting an exchange auction. When conducting the offer through the investment bank’s application book, the actions cited in SS. 14–17 are not performed.
| No. | Action | Duration of the stage (days) | Term |
|---|---|---|---|
| 1 | Deliberation on the issue of securities by the company’s Board of Directors. | - | P |
| 2 | Preparation and publication of data on the issue of securities. | 3 | P+3 |
| 3 | Preparation of the decision to issue and offer circulation of securities. | 25 | P+28 |
| 4 | The board of Directors’ approval of the decision to issue and offer the securities for circulation. | 5 | P+33 |
| 5 | Preparation and publication of data on the deliberation of the issuer’s authorized body regarding the issue of securities. | 3 | P+36 |
| 6 | Registration of issuing documents with the FSSM. | 30 | P+66 |
| 7 | Publication of information. Information is made public to a wide range of investors. | 14 | P+80 |
| 8 | Preemptive right (20 days). | 20 (14+6) | P+86 |
| 9 | Summarizing the preemptive rights. Disclosure of information. | 5 | P+91 |
| 10 | Determination of the offering price | T | |
| 11 | Disclosure of information on the offering price. | 1 | T+1 |
| 12 | Payment for shares purchased by preemptive right | 5 | T+6 |
| 13 | Floatation of shares to shareholders who exercised the preemptive right (transfer of shares in the register to the shareholders’ account ) | 1 | Т+7 |
| 14 | Floatation of securities on the Stock Exchange (collection and approval of applications) | 1 | Т+8 |
| 15 | Transfer of the final offering agreement from the Stock Exchange to Underwriter. Issuer sends the transmission order to the register keeper. Transfer of shares in the register to the account of the nominal stock holder (NSH). | Т+8 | |
| 16 | Acceptance of shares to the depo-accounts of the new NSH owners. | Т+8 | |
| 17 | Acceptance of monetary assets to the account of the Issuer or MICEX SC Underwriter. | T+8 | |
| 18 | Submission of documents to the Stock Exchange. Inclusion of securities on Quote List “В” | 4 | T+12 |
| 19 | Sending notification on the results of the issue (additional issue) of securities to the FSSM. | 1 | T+13 |
| 20 | Disclosure of data on the issue of securities. | 1 | T+13 |
| 21 | Start of the secondary offering of securities on the Stock Exchange. | 1 | T+14 |
Securities can be accepted for circulation on the MICEX Stock Exchange
- with inclusion on Quote Lists (securities are listed)
- with inclusion on the list of securities which are not on the Lists
Basic Requirements for MICEX SE Quote Lists
Amounts of remuneration for services related to including securities on the MICEX SE Quote Lists, maintaining securities on the Quote Lists, performing expert examination of securities, and inclusion of securities for offering are listed in the Fees section.
Advantages of Issuing an IPO on the MICEX Stock Exchange:
- High liquidity – 99% of Russia’s exchange turnover;
- Large trades (>5 million rubles) make up 30% of the total trading turnover on the MICEX SE
- Expanded investor base: over 600 thousand clients
Additional IPO Services:
- Pre-issue consulting and IPO readiness diagnostics
- Choice of offering method
- Opportunities for small and medium companies (ICD sector)
- Additional services: PR and IR for initial offering, targeting investor bases
- Techniques for issuing an exchange IPO maximize results from the exchange auction and create prerequisites for the liquid secondary market;
- Support services for the secondary market
- Market-makers and specialists, providing analysis.
- IR services: organization of roundtables, meetings with analysts and investors, and conferences.