February 19, 2007 / 10:14 AM / 12 years ago

UPDATE 1-Sberbank rights issue "looking good" - source

(Writes through, adding Sberbank no comment)

MOSCOW, Feb 19 (Reuters) - A major share issue by Russia’s Sberbank (SBER.MM) was in good shape on Monday, the final day for existing shareholders to exercise their pre-emptive rights, a source close to the deal told Reuters.

“It’s looking good — the right direction,” the source said, on condition of anonymity, adding that orders were still coming in and a fuller picture would emerge towards evening.

State-controlled Sberbank, Russia’s largest bank, is issuing up to 3.5 million shares in a deal fund managers and analysts say could raise $10 billion to $12 billion, potentially making it the largest equity raising ever in Russia.

Sources said that Sberbank’s supervisory board would meet on Wednesday to discuss where to price the offer. After the announcement, new investors will be able to sign up for shares not taken by existing shareholders.

Sberbank declined any comment on either the bookbuilding process or the timing of the supervisory board meeting.

Exactly how the issue will be priced was uncertain, and it remains unclear whether the supervisory board — packed with central bank and government officials — will heed management calls to price the issue close to the market.

Investors polled by Reuters last week saw a discount to Sberbank’s current share price, 92,860 roubles ($3,540), of anything up to 10 percent.

The central bank, which owns 60 percent of Sberbank, has committed to buy nearly 900,000 shares while billionaire Russian investors who own a further 12 percent are having their arms twisted by the Kremlin to sign up.

Foreign investors, estimated to own 20 percent of Sberbank, are finding it hard to deal with the paperwork associated with the domestic placement, which requires a thick batch of documentation to be translated into Russian.

Bookrunners JP Morgan and Credit Suisse have been offering certificates redeemable against Sberbank shares to enable foreign investors to get round the red tape.

“This is an instrument to help international investors overcome the administrative roadblocks,” one source said.

(Additional reporting by Dmitry Sergeyev)

((Reporting by Douglas Busvine, editing by Rory Channing; Reuters Messaging: douglas.busvine.reuters.com@reuters.net, tel: +7495 775 1242))

($1=26.23 Rouble) Keywords: RUSSIA SBERBANK/

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