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Comstar United Telesystems, the Russian telecommunications company, could announce as early as next month plans for an initial public offering on the London Stock Exchange. The offering, part of a growing trend for Russian companies to list in London, could raise up to $1bn.

If it goes ahead, the offering is expected to vie with the IPO of Novatek, Russia’s largest independent gas producer, as the second largest London offering by a Russian company. Novatek raised $966m with its IPO in July.

In the past year, Russia has been the biggest source of listings by foreign companies on the London exchange.

The Russian companies have chosen to list on the London market partly to get access to high-quality investors who have difficulty participating in rouble-denominated IPOs in Russia.

Offerings by Russian companies, together with those by companies from other former Soviet states, have raised approximately $5bn this year in London’s main market, compared with $1.3bn in the 13 years since the end of the Soviet Union in 1991.

The pipeline of Russian IPOs has also been a boon for investment banks.

The Comstar offering is being managed by Goldman Sachs – the bank’s first Russian IPO since the country’s 1998 financial crisis – together with Deutsche UFG, Deutsche Bank’s joint venture in Russia, and Renaissance Capital, a Russian investment bank.

Comstar is a subsidiary of Sistema, the consumer conglomerate that in February raised a total of $1.56bn in the largest Russian IPO in London.

Other Russian IPOs this year have been completed by Pyaterochka, a food retailer, and EvrazHolding, the biggest steel manufacturer, which raised $600m and $422m respectively. Novolipetsk, the Russian steelmaker, is expected to list on the LSE by the end of the year in a deal that would value the group at about £5.2bn.

The recent IPOs, however, have raised concerns about whether investors are aware of the potential risks involved.

“A lot of the Russian companies have very concentrated ownership structures and sell a small part of the stock in the public offering,” said one emerging markets investor. “Many of them are also vulnerable to having claims for back tax, and tax inspectors can be quite unpredictable.”

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