The Moscow Exchange narrowed the price band for its initial public offering to 55 rubles to 57 rubles as investors bid at the low end of the initial range, according to two people with knowledge of the matter.
Domestic and international investors have bid for all shares offered by Russia’s main equity and fixed income bourse, the people said, asking not to be identified because the information isn’t public. The Kremlin-backed Russian Direct Investment Fund and its partner, Chengdong Investment Corp., a unit of CIC International Co. helped generate sufficient demand, said two other people with knowledge of the deal, asking not to be named for the same reason.
Chengdong may get as much as 25 percent of the shares being offered in the IPO, which is set to be completed today, three people with knowledge of the matter said yesterday.
The exchange, which runs Russia’s 50-stock Micex and dollar-based RTS indexes, said Feb. 4 it plans to raise at least 15 billion rubles ($500 million) selling shares at 55 rubles to 63 rubles. The stock will trade on its own platform, after marketing in the U.S., Europe and Russia. A sale at the bottom of the range would value the company at $4 billion.
Quinn Martin, a spokesman for the exchange, declined to comment on the pricing.
China Investment Corp. and the RDIF, which owns an undisclosed number of shares in the Moscow Exchange, set up a $2 billion fund in June, seeking returns of at least 20 percent on investments in companies benefiting from growing trade between the two countries, according to the RDIF’s website. Of that, 70 percent will be invested in Russia, the rest in China.
The exchange plans to use its share of the IPO proceeds to upgrade its trading system and to boost the capital of its clearing subsidiary, the National Clearing Center. The exchange, which handles most stock and bond trading in Russia, will start working with Euroclear Bank SA, operator of the world’s largest bond-settlement system, on trading ruble-denominated government debt next month, according to Euroclear.
Russia’s central bank is the largest shareholder in the exchange, with 22 percent, followed by state-run OAO Sberbank with 9.6 percent, state development bank VEB with 8 percent, according to the exchange’s website as of Jan. 16.
BlackRock Inc. (BLK:US), the world’s biggest asset manager, bought shares in the Moscow Exchange from RDIF in September, the fund said Sept. 28, without providing details. RDIF had 2.7 percent in July. The European Bank for Reconstruction and Development has a 5.8 percent stake in the exchange, while VTB Group holds 5.6 percent.
About 60 percent of the stock offered in the IPO will be sold by existing shareholders through Micex Cyprus Ltd., while the rest will be sold as new shares via Micex-Finance LLC, according to the exchange. Following the IPO, shareholders will be subject to a 180-day lock-up period.
Credit Suisse Group AG (CS:US), JPMorgan Chase & Co., Sberbank CIB and VTB Capital are organizing the IPO. Deutsche Bank AG, Goldman Sachs Group Inc., Morgan Stanley (GS:US), Renaissance Capital and UBS AG’s investment bank are joint bookrunners.
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