ALROSA has successfully carried out its IPO. The company placed its shares at the lower limit of the price range it set for the market. The deal is to yield $ 1.3 billion and the company’s largest buyer will be the Lazard Foundation.
ALROSA closed its IPO bid book on Friday. The offering price was 35 rubles per share with oversubscription reaching about $ 400 million, the Vedomosti Daily was told by two sources close to the opposite sides of this transaction. Altogether, the diamond miner put on the block 16% of its shares. The Federal Property Management Agency and the Government of Yakutia offered 7% each and another 2% was put up for sale as quasi-treasury stock. The deal raked in $ 1.3 billion, of which the Federal Property Management Agency and the Government of Yakutia will have $ 562 million each and ALROSA will get $ 162 million.
One of the daily’s sources said that many of the funds expected a lower price range. The organizers repeatedly offered to Igor Shuvalov, First Deputy Prime Minister, to bring down the price range from 35-38 rubles per share to 32-33 rubles per share, but he insisted on a price of not less than 35 rubles, the participant of one of these meetings told Vedomosti. This position was supported by the head of the Federal Property Management Agency, Olga Dergunova. The spokesperson of Mr. Shuvalov confirmed the meetings but declined to comment on them.
It was expected that the Russian Direct Investment Fund (RDIF) and Blagosostoyanie, a non-governmental national pension fund, will be among major investors in ALROSA. But one of the bidders made it clear that these were not the only subscribers and they were also joined by the Lazard Foundation, Highbridge Capital Management and PIMCO. Another IPO participant said that Lazard placed an order worth $ 300 million (which makes a 3.7% shareholding), RDIF - $ 150 million (1.85%) and Blagosostoyanie - $ 30 million (0.61%). Lazard’s spokesperson declined to comment this to Vedomosti and spokespersons at Highbridge Capital Management and PIMCO followed suit.
"Upon review of the final order book it is proposed to distribute more than 60% of shares to the investors from the United States, 24% to the investors from Europe (including 20% to the investors from the UK) and 14 % to the investors from Russia," said Russian Government’s internal note after the order book for the IPO of ALROSA was closed (the document is available at Vedomosti). The note states that 94% of investors are long-term security holders and 6% - hedge funds.
Former Finance Minister Alexei Kudrin stressed that the IPO took place on the Moscow Stock Exchange, which will increase its credibility. "This will permit to use this platform in the future for IPOs carried out by large-scale companies, including state-owned corporations," Kudrin said. According to him, a lot depends on the quality of the market, its security, simplicity and reliability of financial transactions, "and this is something, which so far we cannot, unfortunately, be proud of." "So far, we are only learning to use the international standards for trading platforms in order to make the Russian market more convenient for foreign investors", the former official said in conclusion.
Bella Zlatkis, Deputy Chairman of the Board, Sberbank, said that foreigners have not seen such a civilized sale of securities on the Moscow Stock Exchange for a long time. "It is the great number of long-term American investors in the order book of ALROSA, which may be viewed as a proof that this IPO meets all the requirements of U.S. regulators, and this is a very positive development," she said.
