Russia kicked off its biggest privatisation drive since the collapse of the Soviet Union, raising $3.3 billion via the sale of 10 percent in its second-largest bank VTB. Demand for VTB was boosted by a fall of 13 percent in its share price since the end of January - which also wiped $500 million off the value of the stake - and high oil prices which attracted investors seeking access to Russian growth.
The bank sold the shares at $6.25 per GDR - broadly in line with current share prices - and VTB's chief executive Andrei Kostin said the placing was twice oversubscribed, pushing VTB shares 3.2 percent higher in London on Monday. Three smaller Russian companies pulled IPOs worth a combined total of more than $2 billion earlier this month, blaming a turbulent market environment and raising some questions over VTB's chance of success.
Analysts said however that investors remained focussed on high-profile names and that the outcome boded well for coming sales. Sberbank, Russia's biggest lender, could follow in the second half of 2011, with the state offering investors a 7.6 percent stake, its chief executive officer German Gref said on Monday, after the meeting with Prime Minister Vladimir Putin.
"If you want exposure to Russia you need to own one, if not both, of VTB and Sberbank. That is the best way of getting exposure to the full economy," a source close to the offering told Reuters on Monday. While emerging market funds have seen strong outflows this year, Russia has bucked the trend. Russia-focused funds attracted inflows of $267 million last week, according to EPFR data, against outflows in China, Brazil and India. Last Friday, when VTB was closing the book, Brent crude oil futures closed at $101.43, their highest weekly finish since 2008 and promising strong revenues for Russia's export focused economy.
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