Armenian companies are not ready for either publicity or IPO

The IPO process implies two stages: primary placement of shares and their circulation on the secondary market. As a rule, Armenian companies ignore the second stage. In 2009 the total amount of secondary transactions was just 98mln AMD - 63% less than a year before.

The first IPO of Artsakh Water Power Plant was a success but the circulation process was unsatisfactory. Armenia has lots of professionals who can perfectly organize the primary public placement of any shares. However, the work to ensure their secondary circulation leaves yet much to be desired. Nobody does anything to develop the secondary market. Nobody deals with the public, which is normally the key buyer of quoted shares.

The problem is that for Armenian companies IPO has one goal: to attract funds from the market and to enlarge production. This approach comes from the lack of modern corporate management principles. Companies direly need professionals who could make the best of the advantages of the capital market. The emitters saying that they are going to enter this market are just doing PR for themselves. Nevertheless, Melikyan expects certain public placements this year. He said that both NASDAQ OMX Armenia and NASDAQ OMX will attentively follow the processes developing on the secondary market.

"Our stock exchange is member of one of the biggest stock exchange operator in the world, i.e. the first step to develop the capital market in Armenia has already been taken. Is the capital market ready for integration? Unless the population is involved, such integration will be impossible. In the countries with developed secondary markets, emitters provide detailed information about their activities thereby improving their image and gaining people's confidence. This unfortunately is not the case with the Armenian emitters," Melikyan said.