Biotech firm raises $2.2 million in first Russian IPO this year

MOSCOW (Reuters) – Russian biotech startup Genetico raised 178.8 million roubles ($2.2 million) on Tuesday in an IPO on the Moscow Exchange – only the second Russian stock market launch since Moscow sent tens of thousands of troops into Ukraine last year.

An unprecedented package of Western sanctions and Russian countermeasures have effectively cut Russia’s financial markets off from Western capital over the last 14 months and forced many Russian firms that were looking to go public to reconsider.

Electric scooter firm Whoosh was the only Russian firm to stage an initial public offering (IPO) in 2022, in a debut that raised less than half its initial target and relied heavily on Russian retail investors for capital.

Before Moscow launched its military campaign, analysts had said Russia’s IPO pipeline looked healthy, with a handful of well-known companies preparing to go public in major deals.

Genetico, a subsidiary of the Human Stem Cells Institute, sold 10 million shares – representing 12% of the company’s total equity – for 17.88 roubles ($0.2192) apiece in its IPO on Tuesday, the company said in a statement.

It said it would use the funds raised to develop its products in Russia, enter foreign markets – across the former Soviet Union and in Asia – register new test systems and create candidate drugs for the treatment of rare diseases.

The IPO gave the company a valuation of 1.48 billion roubles ($18 million) – a far cry from the multimillion- and multibillion-dollar deals Russian companies were placing before the conflict in Ukraine.

“Western sanctions limit the ability of Russian companies to attract shareholders when conducting an IPO in Russia,” said Evgeny Kalyanov, an analyst at Moscow-based investment group BCS.

Nevertheless, he said Genetico’s listing showed Russia’s market infrastructure was working, and could signal future IPOs of Russian firms are a possibility.

($1 = 81.7150 roubles)

(Reporting by Olga Popova and Jake Cordell; Editing by Gareth Jones and Mark Potter)