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Moscow Exchange hoping for over 20 IPOs this year as retail investors rule

FILE PHOTO: A view shows Moscow Exchange office in Moscow

By Elena Fabrichnaya

MOSCOW (Reuters) - Moscow Exchange, Russia's largest bourse, is hoping to see over 20 initial public offerings (IPOs) this year, it said on Wednesday, in a market ruled by retail investors since the exodus of Western capital over the conflict in Ukraine.

Russian companies raised only around 140 billion roubles ($1.6 billion) in nine IPOs and four SPOs (secondary public offerings) last year, highlighting the currently limited scope of public listings, with retail investors snapping up large portions.

State bank VTB's SPO accounted for 94 billion roubles of that total. In 2021, prior to Russia sending its army into Ukraine, retailer Fix Price had raised around $2 billion in a single London IPO.

"We see the pipeline of deals that investment houses have and understand that it is a significantly larger number than the 13 deals that took place in 2023," said Vladimir Krekoten, the exchange's managing director, without estimating how much companies could raise.

"I really hope we will see a figure of more than 20."

Aside from low IPO volumes, retail investor participation has been a key trend. Retail investors' share of stock market trading jumped to 80% in 2023 from 40% 2021, as the share of non-resident investors plunged to 0.4% from 48%.

"In all market segments, we have seen a significant increase in the share of individuals in turnover," said Krekoten, speaking at a financial market forum run by the Kommersant daily.

"It is clear that this is due to the departure of international institutional investors, with the changes in market conditions that have occurred, but nevertheless, the Russian individual has become king of this market and sets certain trends."

With Western markets effectively closed, Russia is the only place retail investors can park their funds. Krekoten estimated the inflow of new money to the stock market and exchange-traded funds from individuals last year at 394 billion roubles, with the number of individuals completing at least one transaction per month increasing to 3.6 million, from 2.2 million in 2022.

($1 = 89.6150 roubles)

(Reporting by Elena Fabrichnaya Writing by Alexander Marrow; Editing by Mark Potter)