Bloomberg News

Russia’s Sberbank Said to Begin Share Sale Tomorrow

September 17, 2012

Russian Central Bank Commences $5 Billion Sale of Sberbank

Bank Rossii’s stake in Moscow-based Sberbank will fall to 50 percent plus one share. Photographer: Andrey Rudakov/Bloomberg

Russia’s central bank is selling 7.6 percent of OAO Sberbank, the country’s largest lender, as the government seeks to reduce its role in the economy.

Bank Rossii is offering the equivalent of 1.71 billion shares in ordinary and global depositary stock at a range of 91 rubles to the market price at the time the order book closes, the central bank and Sberbank said in a statement today. A sale at the low end of the range would raise 156 billion rubles ($5.1 billion).

Russia’s government is seeking the sale as part of its plan to raise about 1.5 trillion rubles through 2015, according to the Finance Ministry. Bank Rossii’s stake in Moscow-based Sberbank will fall to 50 percent plus one share. The state asset sale program has stalled since the $3.3 billion offering of a 10 percent stake in VTB Group 19 months ago. Economy Minister Andrei Belousov said some privatizations planned for this year may be moved to 2013, news wire RIA Novosti reported Sept. 14.

“We think the deal will become the hottest offering of the year and not just in the Russian space,” Renaissance Capital analysts led by Milena Ivanova-Venturini wrote in a report e- mailed today. “The timing for a secondary public offering could not possibly get any better with the unleashing” of a third round of quantitative easing.

Shares Decline

Sberbank rose 4.6 percent to 96.99 rubles in Moscow trading on Sept. 14, valuing the company at about $69 billion. The shares were among the leading decliners on the Micex today, slumping 1.4 percent to 95.68 rubles by the close in Moscow.

Banks managing the sale have received orders for all the stock being offered, according to two people with direct knowledge of the matter. Bankers managing the sale are set to stop taking orders tomorrow, said the people, who asked not to be identified because the process is private.

Comments in January by First Deputy Chairman Alexei Ulyukayev that the central bank may sell “closer to 100 rubles” were of “no relevance,” according to the lender’s chief financial officer, Anton Karamzin. “That was quite a while ago, and they were private opinions,” Karmazin said by phone today.

The sale will be priced in rubles and dollars, with as much as 15 percent of the stock being sold through the Micex Stock Exchange and the rest going to institutional investors. The placement will be in Moscow and London, the lender’s deputy chairman, Bella Zlatkis, told investors today.

‘Last Ruble’

“There should be some sort of discount,” said Mattias Westman, a founder of Prosperity Capital, which manages about $4 billion in assets, including Sberbank shares. “If the state has other things to sell, they shouldn’t push for the last ruble. Other assets have been priced too richly in the past and they are trying to re-establish Russia as a credible capital market for investors.” Westman declined to say whether Prosperity will take part in the sale.

Sberbank said it may acquire the equivalent of 20 billion rubles of ordinary shares in the offering on the same terms as other investors. No new capital will be raised as part of the offering, according to the statement.

Chief Executive Officer German Gref said by phone today the book building will last as long as three days, with pricing decisions made as the book is built.

“We’re lucky, we waited a long time,” Gref said. “Our shareholders set a goal of selling the stake at the maximum price. Now is the most favorable time both to sell the whole stake and to get the maximum price.”

‘Reasonable’ Guidance

Sberbank has already spent the past two weeks talking to investors, Zlatkis said. A price of 91 rubles would represent a discount to the average price last week, she said.

“The initial guidance at the bottom of the range seems reasonable,” Kirill Bagachenko, who manages about $3 billion in Russian equities, including Sberbank shares, at TKB BNP Paribas Investment Partners in St. Petersburg, said by e-mail comments. “We will look closely at the deal and haven’t decided yet to take part because a 4 percent discount is not a game changer.”

The former Soviet savings bank has been transformed under Gref, a former economy minister for President Vladimir Putin. The bank, which holds about 46 percent of the nation’s deposits, has diversified into investment banking and asset management and expanded overseas. Sberbank’s deals this year include Turkey’s Denizbank, acquired in June for $3.5 billion, and most of Oesterreichische Volksbanken AG (VBPS)’s eastern European business for 505 million euros ($633 million) in February. Sberbank this month also agreed to buy 70 percent of BNP Paribas SA’s consumer finance unit in Russia.

‘Critical Step’

“We view this as a critical step in our broader plan to reinforce Sberbank’s position as the leading Russian financial institution and transform it into one of the world’s top- performing banks,” Gref said in the statement. Sberbank is the third-largest bank in Europe by market capitalization after HSBC Holdings Plc and Banco Santander SA (SAN), according to data compiled by Bloomberg.

Credit Suisse Group AG, Goldman Sachs Group Inc. (GS:US), JPMorgan Chase & Co. (JPM:US), Morgan Stanley (MS:US) and Troika Dialog, a unit of Sberbank, are managing the sale, according to the statement.

To contact the reporters on this story: Torrey Clark in Moscow at tclark8@bloomberg.net; Jason Corcoran in Moscow at jcorcoran13@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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