Russian IPOs have provoked serious debate, but they make great returns

HACKLES may be raised at some City institutions after this quarter’s FTSE reshuffle as the UK’s top blue-chip index is filled with yet more emerging markets miners.

Adding two Russian metals players to the FTSE 100 has started a serious debate over how much share capital a firm must float to give minority investors a valid voice; and how many more groups dominated by a few foreign investors we should bring into the realm of passive index-linked UK funds.

But these groups may not be such a problem. The success of many others shows huge investor appetite for access to the world’s least-developed resources. These groups deliver enviable returns and their GDR listings have been reliable for years. They will still sit under the UK’s governance regime. So despite the misgivings, until we produce more mining offerings of our own, the big growth will come from these.