Russia's second largest bank, VTB, will sell the 10% of shares offered by the government at the market price, a source familiar with the oversubscribed placement told RIA Novosti on Friday.
"The book is already oversubscribed. It will be closed today, pricing will be later," the source said adding the bank would sell the shares at market price and is unlikely to provide any discounts.
VTB depository receipts closed at $6.27 at Thursday's close on the London Stock Exchange.
For the Russian government, which owns 85.5 percent of VTB, the secondary public offering is the start of a $34 billion privatization plan. On Thursday, a source close to the road-show said the government has set the goal of selling the whole 10% stake in VTB despite a recent failure of three local companies to float their shares in London.
Foreign investors have showed no appetite for initial public offerings by Russian coking coal firm Koks, Chelyabinsk Tube Rolling Plant (ChelPipe), and Nordgold, a subsidiary of Russian largest steel producer Severstal, which had to postpone or cancel their placements because of poor market conditions.
But another source said unsuccessful IPOs by these firms only helped VTB.
"Investors, who did not participate in the IPOs, saved their money to buy VTB. It is more attractive," he said.
The government had planned to sell 35% minus one share in VTB in 2010-2013 but failed to sell the 10% to a pool of investors led by TPG fund for $3 billion last year. This week a source said the U.S. fund was ready to buy shares for a maximum $100 million. Italy's insurance company Assicurazioni Generali is interested in buying 1% of the bank for $300 million.
In 2007, VTB held Russia's first "people's IPO", when shares were sold to households at 13.6 kopecks. After the placement the price fell 80% and never rebounded.
Merrill Lynch, Deutsche Bank and VTB Capital, VTB's investment arm, are leading the current flotation.
MOSCOW, February 11 (RIA Novosti)
