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Sberbank’s $5.3-billion auction kicks off Russian sales drive

Russian President Vladimir Putin hailed the multibillion-dollar privatization of Sberbank as one of the most profitable anywhere in the past decade.

SERGEI KARPUKHIN/REUTERS

Russia on Wednesday reported raising a strong $5.3-billion (U.S.) in the partial sale of state lender Sberbank that kicked off a new fundraising drive aimed at meeting President Vladimir Putin's vow to voters.

The Kremlin chief hailed the first privatization deal here in 18 months as one of the most profitable seen anywhere in the past decade and a harbinger of future interest in Russia's underperforming emerging market.

Mr. Putin said Sberbank's attractiveness to investors had only been outshone by the iPad maker Apple – the wildly successful U.S. tech giant whose share price broke $700 this week.

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"This was the most profitable deal in the field since the one by Apple," Mr. Putin was quoted as saying on a visit to Kazakhstan.

Mr. Putin said the sale of the 7.58-per-cent stake delivered $5.28-billion – slightly more than earlier reported by the markets – and a return of $3,700 on every $100 invested by the central bank 10 years ago.

"This deal proves that there is huge interest (in Russia)," the central bank's deputy head Alexei Ulyukayev added.

"It is an showcase deal that should in many ways guide investors as they make decisions about Russia," Mr. Ulyukayev said.

Europe's debt crisis had forced Russia to spend many months delaying the start of what had promised to be a three-year $40-billion effort to boost revenues and growth through the private management of lagging state assets.

These auctions will eventually include parts of the fast-growing Rosneft oil holding and the country's No. 2 lender, VTB.

But success seemed more certain after this month's action by the European Central Bank and the U.S. Federal Reserve to inject cash into the markets.

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Russia is now betting that the resulting uptick in market confidence and display of Western interest in the country's financial sector will carry over to VTB's 10-per-cent stake privatization in the first half of next year.

"We were waiting for Sberbank. Now we will definitely head for the markets," said VTB chief executive Andrei Kostin.

"The Sberbank deal opens the way for VTB's privatization," added First Deputy Prime Minister Igor Shuvalov.

The Sberbank auctions was twice over-subscribed and focused almost exclusively on the more heavily traded global notes appearing on the London Stock Exchange.

The sale leaves the central bank holding 50 per cent of the bank plus one share and the foreign stake hovering near the legal limit of 25 per cent on reportedly heavy interest from Britain and the United States.

The new global depository receipts were sold above the minimum set by Sberbank but below their previous closing price in London – a quirk in how the conversion from Russian to foreign shares is calculated by the markets.

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The stock was down 4 per cent in late Tuesday trading on the London Stock Exchange and off 1 per cent in Moscow.

Analysts said private companies in search of new investments should take heart from the international auction that took risks and brought rewards.

No. 2 mobile phone provider MegaFon has been testing the ground for a $4-billion initial public offering in London in the months to come.

Both local tech leaders VKontakte and Mail.ru had earlier called off similar London attempts following the Facebook IPO fiasco in New York.

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