Russian IPO concerns could see oligarch-free FTSE index

LARGE foreign-controlled companies that list in London could be blocked out of a new FTSE index as investors are so concerned about poor governance, FTSE Group said yesterday.

The index provider has asked market users if they want a new index that strips out firms with low free floats, or makes them meet tough governance criteria, to reassure investors as a surge of Russian groups plan to list.

FTSE requires non-UK firms to float at least half their shares to be included in its indices, but firms instead list a UK-incorporated holding company and float about 20 per cent of shares, leaving investors with little control over decision-making.

“Investors are unsure about the number of Russian resources companies seeking to be included into the FTSE through UK incorporation,” said FTSE’s managing director of index governance, Chris Woods. “We recognise that some of our users may have concerns that a simple 25 per cent threshold would not be enough, so we will ask them if they want a higher float or a governance threshold.”

The move could see a new index that strips out such Russian or emerging market-controlled groups. Russian miner Polyus Gold plans to float about 20 per cent of its shares shortly.