Private ownership helps aid greater attractiveness
By Valery Yeremeev
IPO is a popular instrument for capital attraction abroad but only recently became a focus in our country. The first case has now been registered in Belarus, with Borisov’s Medical Preparations Plant JSC offering 15 percent of its shares for sale. These are open to individuals and companies, from Belarus and abroad. The plant’s General Director, Alexander Fando, is not sure that the whole package will be sold but hopes to sell ‘at least half’ the offered amount. The revenue will then be spent on building a new block to produce medicines.
An investment agent — Brostok company — organises IPO. Its Director, Valery Postovsky, tells us about the details of placement, noting that shares are to be placed on Belarus’ Currency and Stock Exchange. As to why a global venue — such as the London Stock Exchange — has not been chosen, Mr. Postovsky explains, “Firstly, we need to develop our own stock market, offering shares to our citizens and national investors. Secondly, taking assets to the London or Frankfurt exchange would require a year or two, costing us several million Dollars. Borisov’s Medical Preparations Plant needs a moderate sum attracted in a short period of time.”
It’s clear why time is of the essence. Bank credit rates are currently high, so selling shares to generate funds is an attractive option. These can then be either injected as floating capital or used for investment. Mr. Postovsky is optimistic about future Belarusian buyers, saying, “Our citizens have available money, so why shouldn’t they invest it in property? The procedure is absolutely open, free and fair: you apply via an accredited participant of the exchange auction, pay and then receive your assets.”
IPO experts have their own views, as economist Georgy Grits notes, “The fact that our enterprises are mastering a new instrument of financing is good but I believe it would be better to attract a strategic investor.” He explains that IPO will only help attract money. “Meanwhile, a strategic investor brings new technologies, knowledge and solutions to a company — in addition to money.”
In fact, the Borisov plant has this goal in mind, with a large Chinese company possibly joining as a strategic investor. IPO is expected to help in this process. Mr. Fando explains that when a company has 100 percent of its shares owned by the state, it strikes a warning note for investors; they are used to seeing joint stock companies with a share of private capital (sometimes alongside state capital).
The IPO procedure enhances the image of an enterprise in investors’ eyes but, to operate on an exchange, it’s vital to proceed as Western companies do: completely transparently with regard to financial accounting and information.