IPO of Russian Companies: Theory, Indicators, Trends and Prospects

Since 2022, a new wave of IPO deals in Russia has shown that the stock market continues to successfully perform capital raising functions in a challenging environment. However, when analyzing current trends, the historical data on Russian IPOs accumulated since 1996 is often not taken into account. The purpose of the article is to identify the main trends in public offerings of Russian companies’ shares from 1996 to July 2024 and the features of the new wave of IPO deals since 2022. The analysis is based on a unique database on 185 IPOs and 88 SPOs. An extensive review of studies explaining the first trading day underpricing and subsequent cumulative abnormal returns (CAR) has revealed the importance of monitoring these indicators for assessing the performance of Russian IPOs. The empirical analysis has shown that the Russian IPO-SPO stock market in 2023–2024 is significantly inferior to deals in the previous historical period in terms of volume and size. However, the size of underpricing and CAR for the first 100 and 250 trading days of the new wave of IPOs is significantly higher, which indicates the greater efficiency of current deals for investors. A positive trend of the new wave is the predominance of IPOs over SPOs and cash-in deals over resale deals. Unlike many studies of foreign markets, this analysis has shown that the size of the first trading day underpricing has a positive effect on the cumulative excess return of shares over the medium-term time horizon. The significance of this relationship has noticeably increased in the new wave of deals, which may become an important factor in the growing popularity of IPOs and the inflow of new capital into the financial markets in Russia.