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Russian IPO Boom And 'Relationship Capitalism'

Posted on July 6, 2011 at 12:30 PM

The London Stock Exchange (LSE)'s annual conference on "Russia and the CIS: Return of the IPO" is on today and tomorrow. Very timely.

James Ferguson, capital markets partner at professional services firm Deloitte, says: "The LSE is proving to be a favoured destination for Russian companies looking to IPO, raising $3bn through to the end of June this year, surpassing the $1.8bn for 2010."

He adds: "Traditionally, Russian companies looking to list in London have fallen into broad categories of either commodities or resources. We are now seeing a wider variety of companies coming to market from banks (Nomos Bank), food producers (Avangardco Investments Public Limited) to technology companies (Mail.ru Group Limited).

And he points out : "The companies will need to demonstrate a strong growth story backed by an experienced management team." So it looks like Scott Eversman of headhunters Heidrick & Struggles, an acknowledged expert in the field, as well as the search firm Egon Zehnder, are likely to be very busy.

Everyone involved in building these boards needs to take extra care. And the corporate governance watchdogs need to keep up the scrutiny. Better more scrutiny now than disaster later.

And on scrutiny, In Italy we see an excellent example of what the FT terms "relationship capitalism" - now there's an excellent phrase-in a story about the ruling against Cesare Geronzi, the former chairman of Assicurazioni Generali, the country's largest insurance group. He has just been handed a minimum four-year sentence for his role in the 2003 bankruptcy of food company Cirio.

The FT has the details. Mr Geronzi, 76, was forced to quit Generali in April after clashing with directors over strategy, an outcome the FT says was "considered a sign of the waning political power of Mr Berlusconi and his allies in Italy's most inluential boardrooms."

Categories: Corporate, Behaviour, Scrutiny