Credit Bank of Moscow got approval to raise as much as 39.6 billion rubles ($730 million) selling shares to the public, the latest Russian company to turn to equity investors for cash amid the best stock-market rally in Europe.
The lender will offer at least 10 percent of that stock in an initial public offering from June 22 to June 30, selling shares at 3.62 rubles (7 cents) each, according to a regulatory filing released following approval from Credit Bank’s board. The dollar-denominated RTS Index has risen 22 percent in 2015, compared with a 2 percent gain for the MSCI Emerging Markets Index.
The sale will test investor appetite for banks as they grapple with official interest rates that have doubled since Russia’s incursion into Crimea in 2014, which triggered sanctions that blocked companies from global debt markets. Lenta Ltd., the country’s second-biggest hypermarket chain, and United Wagon Co. have tapped equity markets since January as a truce in Ukraine helped drive appetite for Russian assets.
“The situation in the banking sector remains tough,” Vadim Bit-Avragim, a money manager at Kapital Asset Management LLC in Moscow, which oversees 175.4 billion rubles, said by phone. “They shouldn’t try to sell shares at a premium.”
The bank, which met with private and institutional investors on Friday, said it would use the cash to develop its main business line, without giving details. VTB Capital is the global coordinator and bookrunner for the IPO. The final size of the IPO will depend on market conditions and investor interest, the lender’s press service said by e-mail on Friday.
The ruble, which dropped 1.4 percent against the dollar on Friday, has rallied 20 percent this year, the most among 24 emerging-market currencies tracked by Bloomberg. Russian local-currency bonds have also surpassed emerging nations with returns of 36 percent in 2015.
The Blagosostoyanie pension fund may buy Credit Bank of Moscow shares at a price-to-book ratio of 0.8 to 0.9 in the IPO, fund owner Boris Mints told Bloomberg at the St. Petersburg International Economic Forum on June 18.
That is consistent with the price being offered by Credit Bank, according to Bit-Avragim, who speculated the lender may seek to use cash it raises to fund an acquisition. Its owner, Roman Avdeev, is in talks to buy UralSib Financial Corp., Kommersant reported in May, citing unidentified people with knowledge of the matter.
United Wagon Co. raised 9 billion rubles in an April IPO, while Lenta sold $225 million of shares in a secondary placement a month earlier. A company linked to billionaire Sergei Galitskiy raised 9.8 billion rubles offering stock in his retailer PJSC Magnit in February.