THE successful flotation of Ruspetro, the Russian oil and gas explorer, is being looked on by many in the City as an opportunity to finally get a moribund IPO market off the ground.
It’s the first main market listing of the year and it follows a period during which only the most courageous or crazy banker would contemplate taking anything but the most established company, such as Glencore, to market.
So what lessons can be learnt from the deal, which continues to trade just slightly below issue price but closely enough not to dissuade too many others from following in its footsteps?
Advisers, headed by Bank of America Merrill Lynch, say that there were broadly three key elements in the process that helped get it through to the finishing point. They can be broadly defined as timetable, pricing and publicity (or being sparing with it).
The important thing about the timetable in this instance is that the bankers eschewed the conventional timescale, known as two plus two, in which they traditionally spend two weeks in pre-marketing and follow this by two weeks of a roadshow with a firm end date.
Here they worked on the deal for a period of around eight weeks, although this straddled the two week Christmas holiday.
The first period ahead of Christmas involved management meeting between 15 and 20 of the key institutions.
When it became clear that the soft market and the imminence to the Christmas break made pricing impossible, the process was effectively put on hold until the new year.
Then, with the client putting the pressure on, Merrill’s Rupert Hume-Kendall and Mirabaud’s Peter Krens took control of institutional distribution.
Whereas Mirabaud Securities made a valiant effort to sell a deal that would have valued the group at $550m new money, Hume-Kendall led the charge to get investors to sign up at a more realistic price between $425-450m. “This market isn’t for the weak-hearted,” he told me, explaining how he managed to get the deal covered in one day.
All this was achieved with very little publicity. Says Krens, who worked on the deal at Mirabaud: “The low key approach is definitely the best unless you are selling a well-known retail brand.”
Expect some of these lessons to be learned in future deals.
david.hellier@cityam.com
