MOSCOW Promsvyazbank will likely issue subordinated bonds or seek a strategic investor to boost capital, analysts said on Tuesday, after Russia's No.11 lender by assets pulled a stock market listing.
Russian firms have been jostling to take advantage of a rally in stock markets, particularly since the Russian state raised 159 billion roubles ($5.1 billion) from the sale of a 7.6 percent stake in Sberbank (SBER.MM), the country's biggest bank.
PSB, 88.3 percent-owned by billionaire brothers Dmitry and Alexey Ananyev, said on Monday it had "received interest from third parties outside the scope of a capital markets transaction", which it will consider.
It said it canceled its initial public offering because it and investors disagreed over "fair value". Many IPOs in Europe have floundered in recent years after investors baulked at the valuations being sought by owners.
"It is a shame that another addition to the limited universe of Russian banking equities has been put off, but indicative of the challenges faced by privately owned banks to raise capital at an acceptable price," Sberbank CIB analysts said in a note.
PSB's local capital adequacy ratio stood at 10.72 percent as of September 1, with the statutory minimum at 10 percent.
"The bank may now raise subordinated bonds or attract a strategic investor instead of doing an IPO," Uralsib analyst Natalia Berezina said.
The PSB offering had valued the bank at 0.7-0.9 times its estimated 2012 book value, in line with prices in the sector.
In Russia, only state-controlled Sberbank and VTB (VTBR.MM) along with privately-owned Bank St Petersburg (BSPB.MM), Nomos NMOS.MM and Vozrozhdenie (VZRZ.MM) are listed out of around 1,000 lenders. Only Sberbank trades above its book value.
PSB, had planned to sell existing shares in London and Moscow, to raise $345-$414 million from global depository receipts sale only.
Following the offering, PSB had aimed to issue new shares via a closed subscription, in which shareholders Promsvyaz Capital and The European Bank of Reconstruction and Development planned to participate.
The Ananyev brothers own their stake in PSB via Promsvyaz Capital, with the rest controlled by the EBRD. PSB had appointed HSBC, J.P. Morgan and Renaissance Capital to arrange the IPO.
($1 = 31.0855 roubles)
(Reporting by Katya Golubkova and Olga Popova; Editing by Dan Lalor and Douglas Busvine)