The Incentives and Rationale for Cross-Border ECM Activity in a Sanctions Environment in the Case of Russian Companies

This paper examines the incentives and rationale for pursuing cross-border Equity Capital Markets (“ECM”) activity in a sanctions environment, focussing on Russian companies. The paper begins by examining the existing literature on the incentives and rationale for cross-border ECM, discovering that although the majority of the existing literature is confident it increases firm value (valuation) by reducing required return (cost of equity), how this is achieved remains a source of contention. The authors examine the current state of cross-border ECM, examining the impact of an index listing on firm value in the case of Unilever before then examining the incentives and rationale of cross-border ECM in a sanctions environment in the cases of EN+ and Evraz. The paper concludes with recommendations of when and how to use cross-border ECM, as well as proposing certain London-listed vehicles through which this can be done, applicable both in a sanctions and non-sanctions environment.