Finam Financial Group Managing Director Leonid Pavlikov: Rosatom, Russian Railways, and Sibur IPOs Could Transform the Market

— The President has set a goal to double the capitalization of Russia's stock market by 2030. From your perspective, how realistic is this, and what key factors could stand in the way?

— It's certainly a very ambitious goal, and 2025 was practically a lost year due to the absence of IPO deals. Despite more than 25 companies being ready to go public, we're seeing that during a period of high key rates, there's no appetite for listings. We're now seeing the key rate decline, but not as quickly as the market expected. We may see a few IPOs before the end of 2025, but it certainly won't be en masse.

And given that individuals and companies hold more than 110 trillion rubles in their accounts, we can't really talk about a lack of liquidity overall. But for money to start flowing into the stock market, we need a stable macroeconomic environment and investment cases that are clear to investors. In other words, investors need to understand how they can profit from any given investment. The absence of these factors is holding back equity market development. At the same time, the bond market is very active, and we're seeing interest from both issuers and investors.

— The IPO of Dom.RF is being called a "test of market maturity." What other companies might go public in the coming years, and could they become growth drivers?

— Yes, indeed, how the Dom.RF listing goes will be very important. I wouldn't call it a "test of maturity," but it can certainly be called a "test of readiness" for further achievements. 

If I were to highlight the top three largest companies that could conduct market-moving listings, I would name: RZhD, Rosatom, and Sibur.

— How does Finam assess the current state of the investment climate for IPOs in Russia — is there real demand from institutional and retail investors?

— During the period of high key rates and the availability of fixed-income alternatives at or above the key rate level, we essentially forgot about the primary equity market this year. Yes, companies that saw opportunities in the capital markets began preparing, understanding that it's better to wait "for fair weather" fully armed, because when the "window of opportunity" opens for a quick IPO, it will be extremely difficult to execute without prior preparation. 

Let me remind you that the average minimum preparation period is 6 months, but it's better to start the process, for a number of reasons, 12-18 months in advance. Currently, according to the exchange's estimates, there are more than 20 such companies; by our estimates, over 30. 

Returning to investor demand, the key question is: at what price is the deal? How much can they earn? Right now investors expect returns in the equity market of more than 30-35%; at the peak of the key rate it was 40%+. 

If issuers can offer an attractive alternative to deposits and bonds in their deals, there will be demand. Let me remind you, this isn't a question of liquidity — there's plenty of that right now — but rather a question of existing alternatives and returns.

— Which sectors, in your opinion, are most promising for listings over the next 5 years? Will these be classic blue chips or new segments — IT, biotech, green energy?

— Without blue chips, it's simply impossible to achieve the president's capitalization goals. But in my view, the majority of deals, specifically by number, will be in IT. For example, in 2024 nearly 60% of IPOs were related to STCs (small technology companies), and overall we're seeing substantial government support for STCs and technology companies in general. These measures include, among other things, compensation for IPO preparation expenses.

It's encouraging that they understand the importance of developing the stock market through small and mid-cap companies as well. Before 2022, the stock market was essentially accessible exclusively to the largest issuers, with rare exceptions, of course. Overall, we'd like to see the broadest possible range of issuers on the exchange.

— Many companies are wary of IPOs due to transparency requirements and disclosure risks. What incentives could change this situation?

— Well, you can't force someone to love you. In my view, pursuing an IPO solely to raise capital is a bad idea. In that situation, any requirements, including disclosure obligations, will feel like a burden. But if an owner understands why they need public company status, and the list contains more than 11 points (note: this can be found on Leonid Pavlikov's Telegram channel ), then they should also understand that they'll have many retail investors who have no physical presence on the company's board of directors, no ability to influence the business, and no veto rights. All these investors ask for is openness and delivery on stated promises. Not too much to ask, is it? 

— How important is dividend policy development for new issuers—will this become a key condition for attracting investors in a high-rate environment?

— It's important, but you can't call it a key condition. Yes, if a company builds its entire investment story not on growth but sells itself as a dividend company, then it's important. But for most cases, having a dividend policy with clear payout triggers is sufficient.

— What role will private investors play in achieving the goal of doubling the market? Is the market ready for a mass influx of retail investors, and what barriers remain?

— Mass retail investors aren't just ready to come. They're already here. Right now, individual investors account for well over 70% of stock market turnover. In other words, they determine—or you could say that company capitalizations depend on—their sentiment. 

This is a very significant and visible force in the market, and you need to know how to work with them. Another point is that individual investors have more than 60 trillion rubles sitting in deposits outside the market. If even a portion of that money flows into the market, it will provide additional capital and help tremendously in achieving the goal of doubling market capitalization. Good deals, first and foremost, can stimulate this flow.

— What else is needed for liquidity growth—expanding the number of brokers, tax incentives, new financial instruments?

— Let's start by removing current liquidity restrictions. Many existing brokers, who among other things operate IIS accounts, block not only primary placements but also deny access to non-qualified instruments (note: instruments that cannot be used without confirmed "qualified investor" status) that are available to a broad range of investors. 

Let me remind you that with an IIS, you cannot withdraw funds without closing the account. So if a broker doesn't provide access, the investor either doesn't participate in the deal or closes the account and opens one with another broker that does provide access to deals. I think everyone understands that the first scenario is more common, and the market simply doesn't see demand from this investor who is effectively locked in with the broker. This is the key problem, not new brokers.

— What steps is Finam itself taking to stimulate IPOs and attract new issuers? Are there any joint initiatives planned with the exchange and regulator?

— We're actively working with technology companies. We have a course, which we developed together with Skolkovo Technopark. Under this program, we've brought together market experts to train company owners and top management on all aspects of deal-making. We plan to continue developing the program through 2026 and beyond. We actively participate in various conferences and events. And of course, we work very closely with companies that have chosen us to organize their transactions.

— Looking strategically: is doubling the market capitalization more about the number of IPOs or about growth in the value of already-traded companies? And what risks does this "2030 plan" face?

— It's about both. But of course, the main contribution will come from new issuers, or existing ones that decide to conduct an SPO/FPO. As for risks, I'd point to geopolitics, the state's monetary policy, and the state's tax policy. We're seeing major tax innovations right now, and not everything is clear to everyone yet—businesses need time to calculate all the effects and adapt.