A politically motivated decision
NASDAQ will delist Ozon, Yandex, CYAN, Headhunter and Qiwi securities. In other words, the largest international stock exchange will exclude the shares of Russian companies from the list of investment instruments admitted to trading on this site. Trading in these securities has not been held since February 2022. The problem is that forced delistings can induce bondholders to demand early redemption from companies. And these are considerable sums.
Whether Russian firms will appeal against the decision of the American exchange and what are the chances of success, experts told MK.
The delisting process will take place on March 24, unless the companies appeal the decision.
In fact, trading in the securities of the mentioned companies has been suspended on the American stock exchange since February 28, 2022. Yandex and Ozon have already confirmed their intention to appeal. Qiwi also made a statement on NASDAQ. The company noted that the decision to delist its shares was made by the stock exchange unilaterally. However, this event will not affect operations and business development in any way.
In previous years, Russian companies actively placed shares on foreign stock exchanges, as this interested American investors and promised higher amounts of funds raised. In addition, an IPO (initial public offering) on such a large stock exchange as NASDAQ was also a matter of prestige, Russian business immediately entered the international level. And it was really possible to raise funds, the capitalization of companies grew, the securities of our largest companies were popular due to good profitability.
But times have changed, and now it is obvious that the placement of shares on stock exchanges in unfriendly states does not make sense and does not special benefits, and the costs (even reputational) are quite high.
The delisting will not have any effect on Headhunter and QIWI, the analyst at Markets. Money. Power» Sergei Ramaninov. The situation is more complicated with Yandex and OZON, they have issued convertible bonds.
“It follows from the latest disclosure of the companies' financial statements that Yandex has agreed to buy back bonds with almost all holders, and OZON with only 35.9%. The NASDAQ delisting allows convertible bondholders to turn to Ozon to demand early redemption. In this case, the company may need $480 million. Meanwhile, in the first nine months of 2022, Ozon had $1.1 billion in cash and cash equivalents in its accounts,” he notes.
According to Vasily Karpunin, Head of the Information and Analytical Content Department at BCS World of Investments, the downside of the situation is that the delisting is highly likely to indicate that the securities will not start trading on the NASDAQ for a very long time. Now the status is just frozen.
“After the delisting, the company has 7 days to file an appeal, which will be considered by a special commission,” says Emil Yusupov, partner at Intercession. “Some companies whose shares are going to be delisted have already announced their intention to appeal this decision, and this is understandable: they need to try to minimize the risks caused by such actions on the part of the exchange and reassure their investors.”
This delisting is a political decision, that is, it has nothing to do with the deterioration of the financial situation of Russian companies, emphasizes TeleTrade analyst Alexei Fedorov. In his opinion, it is precisely for this reason that one should not expect any noticeable financial consequences from the forced delisting of Ozon, Yandex, Headhunter and Qiwi from the NASDAQ exchange.
“Most likely, there will be attempts to appeal the NASDAQ decision, but since they are not associated with serious financial losses for the delisted Russian companies, the issue will rather be about protecting their image of a reliable and respectable company, and this does not imply a tough legal confrontation,” the expert says. “That is, for Russian companies, it may be more important not to list on NASDAQ itself, but to publicly admit that the exchange’s decision to exclude them is politically motivated.”
The fact that NASDAQ will delist shares of companies from Russia — that is, remove them from the list of securities available for purchase — it is unlikely to upset domestic corporations, believes Ivan Samoylenko, managing partner of B&C Agency. “They can place their securities on the Moscow Exchange or in friendly countries — for example, in Kazakhstan, China … There will always be investors who will be happy to purchase securities of market leaders in their sectors,” he believes.