Speculative innovation

One of the trends in 2010 was the beginning of a series of Russian IPO venture capital and innovative companies. As part of this trend is the director of venture funds, "Troika Dialog" Andrey Vakulenko certainly distinguishes placement mail.ru, which was attended by LSE $ 912 million in the overall assessment of the company at $ 5.7 billion, "These companies are doing a great job and for other projects, too - a large successful placement improves the estimates for all ratios and attracting investors' attention to Russia's subsequent IPO ». IPO without rules. A year was rich in placement. Now, investors are finally able to satisfy the interest of the popular sector in the West, Life Science in Russia, where the sentence is actually missing. At the opening in mid-2009, the site "Market innovation and investment" (MII) MICEX located "Institute of Human Stem Cells" (HSCI), and this year he was joined by "Plant Environmental Technologies and ekopitaniya DIODE" and "Pharmsynthez." Also in 2010 the site housed RII engaged in navigation technology PHT. HSCI IPO was to be indicative of the sector, marking the start of a full site RII. The success was stunning: the early days of the paper were the leaders in terms of growth, eventually risen in price more than doubled. "The first biotech company in the history of the Russian stock market, which conducted the initial pub-private placement of its shares" - such a resounding start paved the way for the IPO of two companies in the sector. That securities of the HSCI benefit not matter - liquidity has fallen, and with it, and quotations, and sometimes falls below the initial price. Of course, this did not prevent the fall of the company to get the results of research of the Center for Capital Market Development honorary title of "Best IPO company's innovation," but at the time of researches in the category included all three companies. The researchers, in addition to distributing titles, already not too weighty because of the low number of competitors have come to a curious observation. The ratio of trade for the first month after the IPO and the average monthly trading volume in shares for the entire period since the IPO, zachas-thuja differed by tens of times. RNT for the initial volume was above 38 times, and for the HSCI and Diodes - 11 times. At the same time a number of issuers, even intra-day momentum initially often several times the volume of the room - that is sometimes a large proportion of shares changed owners several times a day. Given the specificity. And apart from the speculative status, amid heightened attention to these exemplary placements of the pioneers not only received praise. For example, the company "DIODE" individual investors accused that involved in the IPO money was actually paid out by the original investors of the project. Natalia Odintsov, deputy general director of "Russian Funds" actively working on the site symmetry, does not see this as a problem: "If you completely" out "financial investor or partially" out "management - nothing strange or wrong, people have invested in the business, and then sold it, "- she said. Worry about the future of the company, in its opinion, it is worth, only if the shareholders, especially among managers, show the market that they IPO - is the "end of history." This behavior is always a negative sign, but these rules apply as for innovation, and to any other companies, summarizes Natalia Odintsov. Accusations against groundless DIODES: registered an additional issue of new shares, and of reporting under IFRS for the I half of 2010 that proceeds from the sale of shares by large shareholders in the company back in the form of Zai-mov, says head of corporate finance "Finam" Alex Kurasov . "The stock price in the first few weeks have brought down the minority shareholders, former employees, retirees and their heirs, thrown in the stock market at any price, as soon as they got liquidity," - he said. The main accusation against nestled companies - lack of "real business", which is why their papers are mainly used for speculation. A company can go to the exchange, for example, no FRS or without the proper level of corporate governance and transparency, or in the absence of a product, at the expense of which is scheduled to rise - when there are only plans that such a product at one time would be, and while it is much buyers, says Alexei Kurasov. In any case, these companies have patents, design, product, current and potential suppliers and consumers, objected Natalia Odintsov. In the world there are many innovative companies that have a patent, design, research and a little OCD - and they attract money from the stock exchange in the development of production: "Actually, why it's called innovation: they are developed in a few years could" shoot ", and can not, and this is speculative - she explains. - But this black and white in the prospectus and the investment memorandum, so that the main thing - that market participants understood this. " "In our portfolio until there is only one paper in this sector -" Pharmsynthez, "but in order to gather all the information necessary for decision making, we had to go personally to inspect the factory and talk to the leadership - says Managing Director of Investment," TKB BNP Paribas Investment Partners "Vladimir Tsuprov. - It is clear that much of this specific innovation market where a large part of the project cost is in the minds of its managers, and ultimately it all comes down to personal trust. However, the organizers of arrangements could still be done to ensure that such issuers are closer to the standards of the exchange market ", - he continued. The bank account. However, argue that IPO participants have too pay too hard. In evaluating the first offerings of innovative companies in Russia, with no history of post-IPO, the majority of investors are guided by the multipliers IPO already held large companies, although they are completely different and growth rates and profitability of the business. Typically, such calculations are guided by the lenders that, in fact, pushed many innovative and venture capital firms in the IPO, despite the considerable attendant expense: according to unofficial estimates of market participants, they are at MII from 4 to 10% of the placement. Often there is simply no alternative. "Innovative companies, in principle, difficult to attract credit resources: no history, it is difficult to offer adequate collateral, banks are not ready for such borrowers, they often have little understanding of their business - says Natalia Odintsov. - And on the whole credit market, in contrast to the investment of money, fixed-term - that is taken into account not only the probability of success, but whether it can happen just within a given time. " "The companies such as PHT or HSCI minimum assets that banks can take a pledge, in the end, for example, the company offered DIODE rate at 14-16% per annum, and after overcoming the bar capitalization of 3 billion rubles, and to obtain new funds for development banks have already come from the 10-12% "- assessing the effect of placing Alex Kurasov. Queue for relief. While companies spread over RII, is much smaller than the MICEX listing agents accredited to the sector. Among them, in addition to the regional players are the biggest investment companies of the country - the market is clearly seen as promising, or at least status. There is not just investment banks okologosudarstvennyh units, but that could change very soon - in the air smell of benefits, including tax. As conceived by the Ministry of Economy, will benefit individuals and organizations to make a profit by selling shares are not traded on exchanges or traded, but "in the sectors of innovative industries." From speculators fenced specify the period of ownership papers for at least 5 years. How will the mechanism for this is unknown - the law passed, but the order of allocation of shares in the securities of the innovation sector of government has not been established. It is assumed that they will become securities admitted to trading on the MICEX stock exchange sector RII. The new year will be a good time for shopping, as regards the release of the shares acquired after January 1, 2011. Another uncertain, but is also expected decision will be measures to compensate for the cost of innovative companies IPO. The possibility of such benefits has been discussed since the summer. Venture into retail. In terms of development platforms Alexey Kurasov sees prospects for venture capital projects in the IRC-2, which allows to hold private placement with the use of technology and exchange listing in the negotiated deals mode. And in the main sector of RII is waiting for new companies in information technology and medicine, which aim IPO - monetizing existing development already completed, and the main uses of funds from the IPO - the expansion of production and sales. In the meantime, one of the problems of the market - that it is still too small and can not adequately diversify risks: on the MICEX are less than ten issuers. This interest in the sector will, when it will turn a few tens of comparable securities in terms of risk, thus allowing a diversified portfolio with an expected high returns, I'm sure Vladimir Tsuprov. Worldwide, private venture capital fund units are popular high-risk investments to diversify risk. But such mutual funds at the site in general one - "Finam-IT." Market participants see in the future growth of mutual funds, presented at the MII. "Venture Capital Funds - a new form for our market, though the world is traded on the exchanges more venture capital than venture capital firms - says Natalia Odintsov. - In addition to the diversification of risks within a single issuer, the fund is clearly higher solvency, more opportunities for professional investment management, production accounting literate and transparent reporting. " Results innovative company IPO volume to attract (million rubles). Date Published share accommodation (%) Price per share (Euro) Location Maximum Minimum Last HSCI 142.5 12.10.2009 20 9.5 24.595 9.2 12.7 DIODE 297, 38 6.23.2010 10 32.5 35.3 32 32.81 PHT 300 7.7.2010 18 85.23 115.5 78.63 84.05 Pharmsynthez 528 24.11.2010 30 24 24.55 21 23.14 Source: MICEX on 11.01.11