The NYSE has 14 Russian stocks trading compared to 47 on the London Stock Exchange which is why NYSE lured Top executives from United Co. Rusal, the world’s largest aluminum producer, and OAO Uralkali, the biggest potash producer, to an investment conference on Oct. 28, aimed at attracting more Russian businesses to list on the exchange.
“Russia is one of our five target priority markets and we’ve been on the ground regularly to cover Russian companies so that we as a global exchange provider can be seen by Russian companies as a business partner,” Diederik Zandstra, NYSE's head of international listings said in an interview in New York.
Meanwhile, large foreign-controlled companies may be blocked out of a new FTSE index as investors unless they improve their governance and increase their 'free float' of shares available for trading through the London Stock Exchange.
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 are lining up to list.
FTSE requires non-UK firms to float at least 50% of their shares to be included in its indices. Some companies have got round the requirement by listing a UK-incorporated holding company and floating about 20% of shares, leaving key investors with control over management and decision-making.
Concerns were flagged in June this year when FTSE 100 mining group Eurasian Natural Resources Corporation (ENRC) voted two heavyweight independent directors off the board in a move one described as "brutal".
Sir Richard Sykes, a former chairman of GlaxoSmithKline, and Ken Olisa, head of technology merchant bank Restoration Partners, were voted off the board by more than 83pc of the shareholders' votes cast.
Kazakh oligarchs including Alexander Machkevitch own more than 35pc of ENRC's shares, the Kazakh government owns 12% and a 26% strategic stake is held by FTSE 100 mining peer Kazakhmys.
Mr Olisa said in a letter that the move to vote the two men off the board was "in absolute contravention of the assurances given last week" and described the move as "more Soviet than City".
This week Russian miner Polymetal was officially admitted to the FTSE 100 after switching from a Moscow listing. The company raised sufficient capital from a new share issue to pass the qualification for inclusion in the premium index. Its free float will be 50.7% including global depositary receipts and Moscow-listed shares being swapped for shares in the new Jersey-listed holding company.
By raising new capital equivalent to 13.8% of its total equity Polymetal avoided the detailed scrutiny involved in a formal IPO. 45% of the shares are owned by just three billionaires including Russians Alexander Neis and Alexander Mamut and Czech entrepreneur Petr Kellner through his PPF private equity fund.
In contrast Polyus Gold, the gold miner controlled by Russian billionaires Mikhail Prokhorov and Suleiman Kerimov was planning to free-float just 20% of its shares as it sought to gain exemptions to be included in the FTSE100 through a share swap . Jersey-registered Polyus Gold International is to be taken over by Polyus Gold Plc, registered in England and Wales, in order to get London primary listing and to qualify for the benchmark FTSE100 index. The takeover deal was announced Oct. 6. However at the end of October it was put on hold by a commission, headed by Prime Minister Vladimir Putin and which monitors foreign investment. The commission needs additional information to reach a decision, Dmitry Peskov, Putin’s spokesman said. Anton Arens, Polyus Gold’s spokesman, declined to comment on what additional information the government is seeking.
However in London, “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. "
John Bonar
