Russia's No.2 bourse SPB to offer Hong Kong shares, host IPO

·2 min read

(Reuters) - SPB Exchange, Russia's second-largest bourse, will host its first initial public offering (IPO) by the end of the summer and plans to offer its clients the ability to trade around 1,000 Hong Kong-listed shares next year, its CEO Roman Goryunov said.

IPO activity gained pace in Russia in 2021 and at least 10 firms had been planning listings in 2022 before Feb. 24 when Moscow despatched troops in Ukraine, triggering Western sanctions that have hurt Russia's financial sector. SPB Exchange plans to start trading rouble-denominated shares in Russia's Arctic diamond miner Almar by the end of the summer and offer the shares to qualified investors only, Goryunov said in an interview with Reuters. "Generally, we see the (IPO) potential of hundreds of companies. There is a catastrophic shortage of issuers in Russia. I believe that the current situation gives the Russian market a chance to demonstrate its ability to provide capital to companies," Goryunov said. SPB Exchange, which specialises in foreign shares, will begin trading in 12 securities whose primary listing is on the Hong Kong Stock Exchange (HKEX) on June 20, initially providing access to exchange infrastructure for brokers only to carry out trial operations.

Plans are in place to expand the list of Hong Kong–based securities to 200 by the end of 2022 and 1,000 at some point in 2023, SPB Exchange said in a statement.

"We believe this is part of SPB's global issuer programme and is not something done in collaboration with HKEX," a HKEx spokesman told Reuters.

Goryunov said the bourse has been preparing to offer trading in Hong Kong shares for more than two years and has around other 10 jurisdictions on its radar. "Clearly there is an excessive amount of foreign currency (in Russia) and demand for diversification. The Chinese market is huge. The possibilities that it has are much wider than in any other alternative jurisdictions," Goryunov said. SPB Exchange is opening the door to the East after it said in late May it would transfer up to 14% of U.S.-listed shares that its clients possess to a non-trading account, citing restrictions imposed by Euroclear on Russia. This implies investors that used to trade U.S. stocks via SPB Exchange will retain their ownership rights but will lose access to some of their holdings of U.S. stocks, including blue chips such as Apple or Tesla. Tinkoff, one of Russia's leading brokerages, said it had engaged lawyers to protect the interests and rights of its clients. Goryunov said there was no specific solution ready to resolve the issue. "Market participants together with the regulator are pondering hard... and are taking certain actions. But for now, unfortunately, it is impossible to say that there is a clear and understandable algorithm for how the situation will be resolved."

(Reporting by Reuters; editing by Jason Neely)