New, exotic IPOs require caution

New, exotic IPOs require caution

One of the things that happens when you’re trawling the RNS feed every morning is that you end up reading about strange and wonderful IPOs.

In the last few days, for example, we’ve had:

1. MENA Land Plc – this has been formed “for the purpose of making acquisitions in the real estate sector in the UAE.

It will start life as a cash shell with just £700k after IPO expenses, and will then look to raise more capital to start building its portfolio. I guess it will be of interest to those who follow the property cycle in that part of the world. Those without any insight (like yours truly) will stay well away.

2. Rustranscom – intention to float next month. It’s “a leader in specialised rail freight transportation in Russia and Kazakhstan”. Here is its website (in Russian). It serves a range of leading commodity merchants.

Russian companies listed in London tend to be treated (how should I put this?) with a degree of scepticism.

Gazprom (OGZD), for example, is allegedly on a forward P/E ratio of 1.4x. You can get a juicy yield of almost 14% with that. You just have to trust that the Russian Government won’t decide to keep the dividends all for itself at some point.

I’ve already got quite enough Russian risk in my portfolio, thank you very much (through DP Eurasia). But for those who feel they want some more Russian in their investment portfolio, they will soon have a new opportunity.

Watching IPOs is fun – and might give us a headstart for when they become exciting buy opportunities (Boohoo (BOO) comes to mind). Let’s try not to miss any!



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