Investorsparticipating in the special public offering of the Russian government's 10.9%stake in diamond miner PJSCALROSA have bid between 62.5Russian rubles and 65 rubles per share, but the final bid could be higher thanthis once international bids arrive, Interfax reported July 7, citing severalsources close to the deal.
Leadmanagers Sberbank CIB and VTB Capital started book making on the offering Wednesday,and both expect investors from the U.S. and Europe to bid before the finalclosing Friday, according to the newswire.
TheRussian government presently controls a 43.98% stake in the diamond company,while the regional government of Yakutia controls a further 25% plus 1 sharestake.
Russianmedia reported earlier in the week that the Kremlin had targeted a sale priceof 71 rubles per share, which would raise approximately 57 billion rubles forthe full 10.9% stake.
Threeinstitutional investors that already control 6.62% of the miner — OppenheimerFunds, Genesis Asset Managers and Lazard Asset Management — are allparticipating in the offer, while other investors, including the Russian DirectInvestments Fund and its Asian clients, could also participate and dominate thebook build, according to BCS Global Markets, a Moscow-based brokerage.
Accordingto Oleg Petropavlovskiy, a mining analyst with BCS, the deal should seeAlrosa's free float ratio increase to 34%, while the stock's weighting in thebenchmark MSCI Russia should rise to 2%. Both factors could prompt additionalbuying and spark a revaluation of the miner, which currently trades at a ratioof price to adjusted earnings of 7, he wrote in a note to clients July 7.
Kremlinofficials will decide whether to sell the stake on Friday after bidding closes,Interfax reported.
TheRussian government re-ignited its stalled privatization program earlierthis year, after a 3.68% contraction in GDP in the country in 2015 and the dropin oil prices helped to drag the state budget into deficit.
As of July 7, US$1 wasequivalent to 63.94 Russian rubles.