The Bank of Russia has proposed subsidies for companies to enter the capital market if they are involved in priority projects for the economy. These subsidies could be financed from the funds that are now spent on subsidized loans.
The Bank of Russia has proposed to pay subsidies to companies entering the capital market, according to the draft recently issued by the regulatory bodies, Main Vectors of Financial Market Development until 2027. Raising capital on the public market is possible through IPO (initial public offering) and SPO (secondary or additional public offering).
“One possible option is equity financing subsidies, i.e. paying a subsidy distributed over time to companies entering the capital market, as an alternative to subsidies paid on loans,” the document states.
The Bank of Russia proposes to finance subsidies to issuers using funds that are now allocated from the budget to subsidize soft loans.
“Companies involved in priority projects for the national economy (for example, projects focused on technological sovereignty and structural adaptation of the economy) can be eligible for such support,” the Central Bank believes.
According to the Central Bank, subsidies will make it equally appealing for companies to attract financing through preferential bank loans (partly subsidized by the state) and through stock listing. Currently, concessional lending prevails, the regulatory body observes.
“This idea is extremely non-conventional,” says Sergei Khestanov, economist and Associate Professor at the Russian Academy of National Economy and Public Administration (RANEPA). “Nevertheless, in view of the restrictions on capital outflow, it is quite feasible, at least for some time.