Free Trade Reigns as Investors Run Up 1st Russian Firm on the NYSE

Even the Russians couldn’t bring a bear to Wall Street.

In the first day of trading on the New York Stock Exchange for a Russian company, Vimpel-Communications on Friday rose nearly 50% above its offering price.

“Only a few years ago, it was difficult to imagine we would achieve this kind of breakthrough,” said Dmitri Zimin, chief executive of VimpelCom, as Russia’s biggest cellular telephone service provider is often called. “We are very much proud that it was our company.”

To mark the occasion, traditional Russian singers, dancers and jugglers performed on the floor of the NYSE before trading began. Russia’s red, white and blue flag flew outside the building, alongside the Stars and Stripes.

VimpelCom sold 5.4 million shares early Friday for $20.50 apiece in an initial public offering of American depositary shares. The offering was bigger than expected and nearly $2 above the projected price range.

The shares, which represent securities in foreign companies, opened on the Big Board at $28.25 each, prompting a roar from the trading post where the first transaction was made. They rose as high as $30.25 before settling back to close at $29.

VimpelCom holds 59% of the Moscow market and had a $27.6-million profit last year, nearly triple the profit from 1994.

NYSE officials have been working for years to help Russian companies list on the exchange. In May, NYSE Chairman Richard Grasso traveled to Moscow for a conference with 18 privatized companies.

The biggest stumbling block thus far has been strict U.S. accounting rules, which are difficult for huge, former state-owned companies to comply with.

But VimpelCom was founded in 1992 by a group of radio and defense equipment experts with help from a U.S. investment firm, making the road a lot easier.

Privately held FGI Wireless Ltd. of Chicago owns about 20% of the stock.

“It was just a matter of simplicity,” said Richard Bernard, the NYSE’s top in-house lawyer. “Right from the beginning they had the influence of Western-style accounting.”

Other Russian companies such as the energy giant Lukoil and the commercial bank Inkombank already trade on a limited basis on the Nasdaq Stock Market, but are not allowed to list their share prices.

NYSE officials said more Russian companies will get listings in the coming months, but would not specify which ones. The NYSE has 280 foreign issues representing 12% of its daily volume.

For the Russian companies, a stock listing provides a huge new source of capital, as well as much-needed recognition that can support other fund-raising efforts, such as debt offerings.

But are there dangers for U.S. investors? In its prospectus, VimpelCom points to Boris Yeltsin’s poor health and several other political and economic uncertainties.

“Sure, the markets react to major news,” said Vimpel Chairman Augie Fabella, a 30-year-old American with master’s degrees in economics and foreign policy from Stanford University. “But the underlying fundamentals of the company are strong.”