Kyiv hopes to attract IPOs with new system

Ukraine's main stock exchange, which grew 135 percent last year, will create a system to make it possible for companies to launch initial public offerings, the stock exchange's president Irina Zarya told Reuters.

 

Some 335 companies are listed on the stock exchange, the PFTS, but they came onto the market through secondary sales of shares. There is currently no system in place to cope with big IPOs, forcing companies to list abroad.

 

"What we are doing is a specialised system which gives wider possibilities, allowing for both initial share issues as well as buying back shares," Zarya said in an interview.

 

"The system allows for trading in shares and debt and gives significantly more instruments to do what the client-issuer and underwriter want to do," she said.

The system will be in place within three months.

 

"We are creating a database of investors, including foreigners, whom we want to invite to our national auctions," Zarya added.

Machine building, agriculture, and companies that would gain from Ukraine hosting the Euro 2012 soccer championship, such as developers and constructors, would likely be the first to consider IPOs, Zarya said.

 

She also said the stock exchange would "invest significant funds" in improving the trading system, which suffered technical glitches this month due to a surge in activity after global market volatility.

PFTS volumes, including corporate, government and municipal debt, and certificates doubled to 31.5 billion hryvnias ($6.2 billion) last year from 14.636 billion hryvnias in 2005.

 

The volume of shares traded has tripled in that time to 10 billion hryvnias (almost $2 billion).

But the higher volumes have strained the trading system, which wavered recently when activity surged after a U.S. rate cut caused global markets to rally following days of big losses.

"This year we will work on renewing the trading system to raise productivity in a time of increased volatility on global markets and a huge number of transactions," Zarya said.

 

"By mid-February, we want to finish work on speeding up the information terminals."

The longer-term goal would be to introduce a "new generation" system integrating all trading platforms and giving remote access to private investors, which could be introduced within 18 months, she said.

 

The new interest is helping with liquidity and the PFTS hopes will encourage companies to launch domestic IPOs rather than seek out foreign markets such as London, Frankfurt, Warsaw and Vienna.

 

Though global volatility, sparked by concerns that the United States could go into recession, has affected the trading system, Zarya saw no significant impact on its performance.

"Last year the PFTS index grew 135.4 percent. The index has fallen by 4.6 percent since the start of this year... I don't see any expectations of worse business conditions in Ukraine," she said. "I do expect a continual rise in trade volumes."

 

Article is taken from Guardian