Moscow Exchange Falls Most in Almost Two Years After CIC Exits

  • CIC sells 5.2% stake in MOEX at 11% discount in bookbuilding
  • Stake sale will pressure stock for months: Aton's Malykhin

Moscow Exchange PJSC shares dropped the most in almost two years after China’s sovereign fund sold its entire stake in Russia’s main bourse.

Chengdong Investment Corp., a unit of China Investment Corp., sold its 5.2 percent stake in the Moscow Exchange at 89 rubles a share, according to an e-mailed statement. CIC raised 10.6 billion rubles ($138.9 million) from the sale, which offered the stake at an 11 percent discount to the Feb. 3 closing level.

Moscow Exchange shares have jumped 81 percent since the company’s February 2013 initial public offering as volatility helped boost trading volumes. The accelerated sale, announced late on Wednesday, closed in two hours, with hedge funds buying 46 percent of the offering, according to a person familiar with the transaction who asked not to be identified because details are private.

“Today’s big drop is due to the rather large discount that was offered during the sale,” said Alexander Losev, chief executive officer at Sputnik Asset Management in Moscow, which holds Moscow Exchange shares. “The fact that a rather significant stake was sold overnight is positive since it shows appetite for Russian stocks."

Shares Decline

The shares dropped 7.3 percent to 92.30 rubles by the close of trading in Moscow, the most since March 2014. The volume of shares trading was 763 percent of the three-month average.

“Moscow Exchange is an interesting holding for investors since trading fees generate cash flow regardless of the market direction," Losev said.

In the sale on Wednesday, U.K. investors bought 47 percent, U.S. investors bought 36 percent, while the rest was acquired by European investors, the person familiar said. Goldman Sachs Group Inc. was the sole bookrunner. CIC’s stake was bought by dozens of large institutional investors from North America, U.K., continental Europe, Russia and Asia, Moscow Exchange said in an e-mailed statement today.

“Such a major stake sale will pressure the stock for several months,” said Evgeny Malykhin, chief investment officer at Aton Asset Management in Moscow, which holds Moscow Exchange shares. “But the fact that the sale was successful with oil close to $30 and the stock still holding above the sale price is positive."

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