MOSCOW (Reuters) - VTB (VTBR.MM) is planning a $2 billion share sale, maybe in the spring, as Russia’s second-largest bank seeks to cash in on renewed interest in state-controlled groups after $5.1 billion was raised in a placing in rival Sberbank (SBER.MM).
The Sberbank sale, which revived a privatization drive aiming at selling Russian state assets worth around $50 billion, could bolster VTB’s capital base if, as some officials suggest, the bank issues new shares as part of the offering.
Russia’s privatization efforts ground to a halt after VTB sold a 10 percent stake in early 2011. The state raised $3.3 billion from that deal, reducing its holding in VTB to 75.5 percent, and plans to cut it by another 10 percent.
“We will go ahead,” VTB chief executive Andrei Kostin told journalists on Wednesday. “We were waiting for Sberbank, it managed to place shares. Good for them.”
Kostin said VTB, with a market value of $19.5 billion, aimed to raise a minimum $2 billion. He did not say how a deal might be structured, only that it might happen in the spring.
“The window is now open. For the banking sector as a whole, anything valued at a price-to-book ratio of at least one is not bad, as margins are falling and capital is under pressure,” said Andrei Kilin, an independent fund manager.
Uralsib estimated VTB’s price-to-book value was 0.9 with 1.3 for Sberbank this year, weaker than emerging market peers with 1.6 but outperforming developed market rivals with 0.7.
Unlike Sberbank, VTB is under a pressure to replenish a capital base depleted by recent takeovers and a share buyback.
VTB shares were down 3.1 percent to 5.593 kopecks at 9:30 a.m. EDT (1330 GMT), down about 40 percent on the price set at its secondary offering in February last year. In 2007, VTB priced its initial public offering at 13.6 kopecks.
Sberbank priced the long-awaited sale of a 7.6 percent stake sale at 93 roubles, raising 159 billion roubles ($5.1 billion) for state coffers.
The deal attracted investors from Asia, Europe, the Middle East and the United States, chief financial officer Anton Karamzin told Reuters.
Karamzin said the deal was split between 300 investors, with more than 10 buying lots of more than $100 million.
One source familiar with the offering said U.S. hedge fund and private-equity investors had bought stock, among them billionaire George Soros, who famously lost money on a telecoms deal in Russia’s 1998 crash, calling it his worst investment.
Sberbank shares were down 1.1 percent at 93.72 roubles, in line with a wider Russian market .MCX down 1.1 percent.
The sale of Sberbank’s stake had been held up for more than a year by weak markets. Last week’s announcement of a new round of credit easing by the U.S. Federal Reserve lifted global market sentiment and opened the window to a placement.
Other Russian privatizations waiting in the wings include shipping group Sovcomflot, although no deals of the scale of the Sberbank placing were likely in the near future.
“This paves the way for other placements - state companies could not tap the market before Sberbank, the same as many private companies which did not want to spoil relations with the government,” said Alexander Golovtsov, chief analyst at Uralsib.
Telecoms company MegaFon MGFON.UL, controlled by Russia’s richest man Alisher Usmanov, also plans to float shares in Moscow and in London within weeks. Together with Promsvyazbank they may raise a combined $4 billion.
Additional reporting by Olga Popova, Gleb Stolyarov and Megan Davies; Writing by Katya Golubkova and Megan Davies; Editing by Dan Lalor