Saying "No Way" in Hindi and Russian
from
September/October 2006
by Craig Mellow
China is not the only IPO launcher these days. Fifty-three Indian companies did IPOs last year, according to Ernst & Young, versus 114 in China. Of the new Indian outfits, 33 opted for a listing outside their home markets, but only one, Patni Computer Systems, came to the U.S., choosing the New York Stock Exchange. Luxembourg, the dominant destination for the Bangalore crowd, grabbed 29 depositary-receipt issues.
The trend is the same in Russia. Just a few years ago its IPO-minded companies flocked to the U.S., hoping to transcend their murky reputation back home. No more. London has the lock on Russia’s $1 billion-plus deals, which have included consumer conglomerate Sistema and oil giant Rosneft. “The American governance requirements are not business; they are torture,” says Anatoly Karachinsky, president of Russia’s top software maker, IBS Group. He was on the verge of a NASDAQ debut when the market collapsed in 2001. Last year he did take the company public—at home, in Moscow.
European companies that would once have dual-listed in the U.S. as a matter of course are no longer doing so. More liquid home markets primed by the healthy euro dampen the appeal of New York or NASDAQ, as does governance hassle. Prime examples are last year’s No. 2 and No. 3 global IPOs: Électricité de France ($9 billion) and Gaz de France ($5.5 billion).
An alarm raised by the NYSE about foreign companies’ delisting because of regulatory demands has so far proved exaggerated. But some are eyeing the exit, if they haven’t departed already—which the U.K.’s Cable & Wireless did in December 2005. “We have fewer operations in the U.S. than a few years ago,” says Craig Thornton, the company’s investor-relations manager, “but Sarbanes-Oxley was also part of the driver. Compliance was running in the single-digit millions each year, and we didn’t see where that cost was justified.”
