CEE Equity

Polish car leasing firm Prime Car launched an IPO on Monday, the first eastern European IPO to launch since the unrest in Ukraine hit emerging markets valuations.

The Ukraine crisis may cause a stream of Russian IPOs to be pushed back by months, but bankers active in the region say that the political upheaval may have even more alarming an impact on equity capital markets by scaring international, non-specialist investors away for years.

Emerging markets are only for experts, as events in Ukraine and Russia showed this week. Big returns and big deals do not change that: they just make the stakes higher. This week, Lenta proved yet again that no matter how compelling the story, or well-liked the deal, investors should bear in mind that any apparently huge reward is always matched by commensurate risk.

New investors in Lenta were hurting on Monday after buying shares in the Russian hypermarket chain days before worries around Ukraine dragged Russian stocks down and pulled Lenta's valuation with them.

Who says the days of the retail emporium are numbered? IPO investors this week visited three distinct departments, stocking up on exorbitantly-priced AO World, an online white goods shop, McColl's, a dowdy dividend yield UK cornershop chain, and Lenta, a Russian hypermarket that has been shrugging off emerging markets volatility.

The memory of a difficult deal from Tinkoff Credit Systems late last year is still haunting Russian banks and other issuers hoping to bring a listing in 2014 and beyond.

Lenta narrowed guidance on its $1bn IPO on Wednesday, having seen wide-spread demand for the deal as investors seek the latest exposure to the consumer retail sector.

Russian lender Credit Bank of Moscow is pushing on with plans for a $500m IPO later in the year, hoping that Russian equities continue to improve after the disruption in January.

Lenta began bookbuilding on its $1bn IPO on Friday, seeing off worries that the deal might not even make that early stage after a rocky few weeks in emerging markets.

Slovak utility GGE pulled what was set to be the country’s first IPO in nearly 10 years on Monday evening, as emerging markets troubles claimed their first public victim in the equity capital markets.

South Africa's MAS Real Estate, a company which focuses on the UK, Germany and Switzerland, is set to raise around €100m equivalent from a private placement at the end of February that will help it pay for further acquisitions.

If the chaos in emerging markets forces upcoming Russian issuers to postpone their deals, there will be a host of specialists ready to sing the market’s censures. But allowing issuers to test the water would give the market flexibility and avoid a shutdown in activity.