About the issue
Publications
Partners
March 2023 (published: 10.02.2023)
Number 1(52)
Home > Issue > Analysis and evaluation of the efficiency of IPO of russian companies
Sosnilo A.I. , Onore A.S.
, Onore G.S.
The article discusses the conduct of an initial public offering (IPO) as a way to attract additional funding compared to alternative sources of external capital, examines the feasibility of this process. The versatile views of researchers on the topic under study are highlighted. The aim of the work is to analyze and evaluate the effectiveness of IPOs of Russian companies by calculating the weighted average cost of capital (WACC) and economic value added (EVA). When using WACC, the efficiency criterion is a comparison of the calculated indicator with the cost of financing raised as a result of the IPO. The study describes a gradual calculation method, as well as the benefits of applying the coefficient. To analyze the feasibility of entering the stock exchange with the help of economic value added, it is necessary to compare its values before the placement of shares by the company and over the next few years after. Increasing the values of the indicator makes it possible to draw a conclusion about the success of the IPO and evaluate the results of the company's activities after raising funds. The article provides gradual calculations of both indicators for two Russian companies that have recently carried out an initial public offering on the Moscow Stock Exchange (MOEX) – Samolet Group and Segezha Group. During the study of the WACC and EVA coefficients, the advantages and disadvantages of their use were identified. The weighted average cost of capital can be used for companies that are just planning an IPO. Advantage of EVA consists in a clear logic of calculation based on data posted in the public domain. In conclusion, a conclusion was made about the effectiveness of the initial public offering of shares for each of the companies, respectively. It is recommended to additionally investigate other indicators to conduct a comprehensive analysis of the feasibility of IPOs by Russian companies.
Read the full article
Keywords: IPO, initial public offering, analysis, performance, valuation, weighted average cost of capital, WACC, economic value added, EVA.
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
UDC 336.648
Analysis and evaluation of the efficiency of IPO of russian companies
The article discusses the conduct of an initial public offering (IPO) as a way to attract additional funding compared to alternative sources of external capital, examines the feasibility of this process. The versatile views of researchers on the topic under study are highlighted. The aim of the work is to analyze and evaluate the effectiveness of IPOs of Russian companies by calculating the weighted average cost of capital (WACC) and economic value added (EVA). When using WACC, the efficiency criterion is a comparison of the calculated indicator with the cost of financing raised as a result of the IPO. The study describes a gradual calculation method, as well as the benefits of applying the coefficient. To analyze the feasibility of entering the stock exchange with the help of economic value added, it is necessary to compare its values before the placement of shares by the company and over the next few years after. Increasing the values of the indicator makes it possible to draw a conclusion about the success of the IPO and evaluate the results of the company's activities after raising funds. The article provides gradual calculations of both indicators for two Russian companies that have recently carried out an initial public offering on the Moscow Stock Exchange (MOEX) – Samolet Group and Segezha Group. During the study of the WACC and EVA coefficients, the advantages and disadvantages of their use were identified. The weighted average cost of capital can be used for companies that are just planning an IPO. Advantage of EVA consists in a clear logic of calculation based on data posted in the public domain. In conclusion, a conclusion was made about the effectiveness of the initial public offering of shares for each of the companies, respectively. It is recommended to additionally investigate other indicators to conduct a comprehensive analysis of the feasibility of IPOs by Russian companies.
Read the full article
Keywords: IPO, initial public offering, analysis, performance, valuation, weighted average cost of capital, WACC, economic value added, EVA.
DOI 10.17586/2310-1172-2023-16-1-27-33