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Russia's Emerging Consumer Market To Spawn IPOs

Dow Jones International News
(Copyright © 2003, Dow Jones & Company, Inc.)
April 1, 2003

MOSCOW — (Dow Jones) — By 2005 10 to 15 Russian companies are likely to seek investment through initial public offerings or bond issues as the domestic consumer market grows, marketing consultancy Interactive Research Group said Tuesday.

Among those contemplating such moves are meat processing companies APK Cherkizovsky and Parnas-M, cosmetics and perfumery maker Kalina (R.KLN), mobile phone and services retailer Euroset and mobile telecommunications operator Smarts.

"The consumer market will only grow further in the future as companies now focused on Moscow expand into regions," said Interactive's chairman Greg Thain.

"Ten of these companies will be completing IPOs either on foreign or domestic markets by the fourth quarter of 2004," Thain added while presenting research on the top 100 emerging consumer market companies in Russia .

The study was co-sponsored by International Finance Corporation, a private sector lending arm of the World Bank.

The report estimated the Russian consumer market, including retail, food processors, leisure and telecommunications, was worth between $260 billion and $275 billion in 2002.

With the local banking sector still underdeveloped after the 1998 financial meltdown, emerging companies have to seek capital abroad for expansion.

Most companies involved in the research have experienced double or triple digit expansions in the past few years as Russia reaped gains from strong oil revenue inflows, Thain said.

Despite concerns growth would halt if oil prices drop, Thain remains optimistic.

"I think that people keep forgetting that Russia with its 146 million population is a huge market," he said. "It doesn't have to export to keep growing."