SVYAZBANK took another big step towards listing shares in London yesterday, setting the price range for its initial public offering.
Russia’s third largest bank is joining the flood of firms from the country rushing to the UK, following larger compatriot Sberbank which listed in London last month, and coming ahead of VTB, another bank looking at issuing stock in the City next year.
The price range has been set at $10 to $12 per global depository receipt (GDR) – the instruments which will be traded in London – and $13.33 to $14 per 10,000 ordinary shares.
The bank is looking to sell up to 25 per cent of its stock in London as part of the joint listing which will also see shares sold in Moscow.
In total the deal should raise between $345m (£215m) and $414m at the given price range. Promsvyazbank hopes the GDRs will start trading in London on 15 October.
The bank’s aim is to use the funds to strengthen its capital position, and finance its expansion into retail and small business lending, from its current base in corporate banking.
Big Russian firms are increasingly listing in London to take advantage of the major pool of investors, and because tough corporate governance rules reassure cautious shareholders.
JP MORGAN, HSBC AND RENAISSANCE CAPITAL
JP Morgan, HSBC and Renaissance Capital are joint global coordinators and joint bookrunners on the Promsvyazbank offering, drumming up interest in the London and Moscow shares.
JP Morgan’s Russian team has been particularly busy in recent weeks, running the book for Russia’s largest bank Sberbank, which also listed in both capitals in a $5bn deal.
It has also been involved in the listings of MD Medical Group and potash giant Uralkali.
Russian firms have been flooding to London to raise funds, tapping the larger pool of investors in the City.
In particular the concentration of index and tracker funds helps IPOs and other issuance get off the ground.
But a London listing also gives investors more confidence that emerging market firms are well run, as it shows they meet tough corporate governance standards imposed by the City authorities.
That enthusiasm from Russia has gone some way to ending the initial public offering (IPO) drought which has afflicted London and investment banks in recent years, although the latest figures from Thomson Reuters show IPOs were down 41 per cent in the third quarter compared with the same period of last year.