Last week saw a decided suspicion fall upon Russian listings, with a handful of aborted IPOS: from NordGold, KOKs and ChelPipe, all due to ‘market conditions’. This morning however, the news that Russia sold a minority stake in its second largest lender, VTB, for $3.3 billion, prompted a buoyant Prime Minister Putin to tell a press conference that the sale ‘attests to confidence that investors have in our financial system and our economic policy’. The Financial Times‘s Beyond Brics advises the Kremlin to temper its triumph with caution:
However, Moscow will do well to examine how this sale was handled. VTB shares fell 13 per cent from the early January as officials issued conflicting comments on how many shares would be sold and switched between a private placing and a secondary market offering.
Russia’s private entrepreneurs have to take their chanceswhen they know the Kremlin is in the market. The fact that threenon-state issues were pulled reflects badly on the sellers and theiradvisers – the prices they sought were clearly too high. But the Kremlinshould be concerned about the damage done to Russia’s reputation in themarket. It is the country’s interest that offerings are more carefullytimed – especially with so much riding on the privatisation programmeand on the country’s hopes of attracting more foreign capital.
Read the whole article here.