Innovators are lured to an IPO – even with money

The state subsidizes the entry of innovations to the stock exchange
Elena Timokhina, UNOVAThe Ministry of Economic Development is preparing to adopt amendments to the Government decree on "Measures to support small and medium-sized businesses."

The state will provide subsidies to innovative enterprises entering the IPO. With a successful placement, companies will be reimbursed up to 50% of expenses.

According to Liana Pepelyaeva, deputy chairman of the State Duma's Financial Market Committee, the Ministry of Economic Development should finalize and approve the by-law by the end of March and allocate the first money this year. "In Order No. 59, it is planned to create a special section "innovation", which will include our initiatives," says Pepelyaeva.

Subsidies will cover all expenses of an innovative company when entering the stock exchange: state registration, initial evaluation of the company, listing agent services, audit and preparation of financial statements, stock exchange services, as well as the so-called "success fee". (This is 5-6% of the volume of the placement, which the company entering the IPO must pay to the agent – Unova). This subsidy will be provided on the usual terms of co–financing: one budget ruble - one private ruble. The maximum amount of compensation is 5 million rubles, while subsidies will apply only to those companies that entered the IPO through shares.

Denis Pryanichnikov, director of the New Markets Department of the Moscow Interbank Currency Exchange (MICEX), considers this amount to be quite justified: "The company spends no more than 1-2 million rubles on initial training, most of its expenses are the payment for success. In total, the amount is just 10 million."

Regions will be involved in the implementation of this provision. "We plan that half of the required amount for the company will be provided by the regional budget," explains Anna Melnikova, deputy director of the Department of New Markets of the MICEX, "in the case of Moscow and St. Petersburg, the ratio of regional and federal money will be 80% to 20%."

There are two main requirements for the recipient company: successful placement (that is, a subsidy can be obtained only after the IPO) and innovation. While there is no legislative definition of innovation, the authors of the amendments to Order No. 59 decided to define innovative companies through their branches of activity: information and telecommunication systems, Internet technologies, biotechnologies, medical technologies and medical equipment, nanosystems and materials industry, environmental management, aviation and space systems, energy and energy conservation, security and counter-terrorism.

"We rely more on the stock exchange," explains Liana Pepelyaeva, "since the company was approved for placement on the MICEX innovation and investment market or on a similar platform, it means that it was recognized as innovative."

RII MICEX proposes to consider innovative companies developing in the field of telecommunications, the Internet, software development and installation, development and production of semiconductor devices, biotechnology, pharmaceuticals, as well as high-tech industries in the field of mechanical engineering and transport.

Denis Pryanichnikov told Unova that the members of the MICEX RIA were involved in the process of developing a by-law, and the changes were based on adapted Western experience. "I believe that the introduction of such a support program stimulates the demand for our market from innovative companies," Pryanichnikov shares, "however, it is too early to make forecasts of the effectiveness of this lever. To enter the IPO, in addition to government-subsidized costs, the company must also bear indirect costs associated with structuring."

The key problem in the implementation of the project Pryanichnikov considers the underdevelopment of the innovation sector, which directly affects the number of exits to the stock exchange. However, he believes that the activities of development institutions and the first example of a successful exit of the company "Russian Navigation Technologies" will warm up the market. "Last year, the RII accepted 8 innovative companies whose liquidity is orders of magnitude higher than ordinary large companies," he comments, "in 2011 we plan to accept 10 more."

Portal "Eternal youth" http://vechnayamolodost.ru21.03.2011