* Share sale values company at up to $8.12 billion
* Sale part of state privatisation plan beset by delays
* U.S. investors buy up 60 pct of shares, Russian 14 pct
* Book 30-40 pct oversubscribed - sources
By Olga Popova and Diana Asonova
MOSCOW, Oct 28 Russia sold a 16 percent stake in
state diamond miner Alrosa at the bottom of a planned
price range on Monday, highlighting the lack of progress in a
state privatisation drive that was supposed to net $13 billion
The $1.3 billion stake in Alrosa, which vies with
De Beers for the mantle of the world's largest diamond
producer, is the Russian state's only sale this year and one of
the ten biggest in Europe so far in 2013.
But the low sale price prompted some analysts to suggest it
had been a struggle to place all of the shares on offer, adding
to the delays or false starts that have hampered the plan to
generate $13.44 billion from sell offs this year.
Alrosa's offer price of 35 roubles per share, putting the
company's market capitalisation at 258 billion roubles ($8.12
billion), was at the bottom of the projected range of 35 roubles
and 38 roubles a share.
"At least they got something, but not that much, and it was
way below what they had originally planned," said Uralsib
economist Alexei Devyatov.
"There is no clear political will in the government to do
the privatisation ... They don't fulfil their own plans."
Prime Minister Dmitry Medvedev in 2010 laid out a programme
of sales aimed at drawing more investment and energy into the
state sector and revitalising the weaker areas of a $2.1
trillion economy now growing at its slowest pace in four years.
But, as many analysts predicted at the time, government has
since proceeded to slash the privatisation targets, unable to
reach a consensus on deadlines for sales and hampered by
officials who argue a weak global economy makes this the wrong
time to sell some of the prize assets on offer.
Sales of shipping group Sovcomflot, a stake in oil monopoly
Rosneft and Russian Railways had all been on the cards
for this year, according to plans from last October. A year on,
only Alrosa has been completed.
Russia's First Deputy Prime Minister Igor Shuvalov said on
Monday the pricing of the Alrosa sale showed a robust level of
"There was a proposal to set a lower price limit of about 33
roubles. We took a risk and set the price at 35 roubles ... both
the oversubscription and the quality of investors show that the
decision was correct," Shuvalov said, speaking at a ceremony to
launch the sale at the Moscow Stock Exchange.
NOT A DOTCOM STORY
Two sources close to the deal told Reuters the order book
was oversubscribed by 30-40 percent, while other market sources
said U.S. investors were the biggest buyers of the shares,
purchasing up to 60 percent of the stake.
Russian investors accounted for around 14 percent.
Buyers included U.S. asset management group Lazard
and investment firms Capital, Highbridge, OppenheimerFunds and
PIMCO, as well as a state-backed fund, the Russian Direct
Investment Fund (RDIF), whose mandate is to co-invest with
Traders can start dealing in the shares late on Thursday.
Others were less bullish on how the sale had gone. Sergey
Donskoy, metals and mining analyst at Societe Generale said
organisers had done well to secure this level of investment.
"From what we know it wasn't easy to build the book even at
the bottom of the range, it required some effort, but despite
all the difficulties the organisers didn't lower the price range
or cut the number of shares on offer," he said.
"It wasn't exactly a dotcom story, there wasn't crazy
oversubscription from the start so the organisers must have felt
some tension until the last moment."
Alrosa, which accounts for 25 percent of global diamond
production by value, is listed on the Moscow stock exchange, but
only a small number of its shares are available to trade and the
market is illiquid.
The sale will lift its free float to 23 percent.
"This was the first major mining IPO in Russia since the
crisis," said Donskoy.
"The first large deal in the Russian mining sector in the
last five years, so it's an important achievement."