March 15, 2012 / 11:49 AM / 7 years ago

Russia to sell $6 billion stake in Sberbank

MOSCOW (Reuters) - Russia’s biggest lender Sberbank (SBER.MM) plans to start a roadshow for the sale of a $6 billion government stake on April 16, in a move that underscores its arrival as a major player in a European industry decimated by the global financial crisis.

A man passes by the Sberbank headquarters in Moscow July 15, 2011. REUTERS/Denis Sinyakov

Two banking sources told Reuters on Thursday that Sberbank, which postponed the plan last September due to weak markets, hopes to sell the 7.6 percent stake in a deal that would also help Europe’s second-largest bank broaden its investor base.

The move, which would see the state’s stake cut to a bare majority, comes less than two weeks after Prime Minister Vladimir Putin won Russia’s presidential election, ending an election cycle in which opposition protests have shaken investor confidence in Russian financial markets.

“Sberbank is now looking at the market and the situation seems to be calm. They are in the mood to do a deal in the middle of April,” one of the banking sources told Reuters.

Sberbank declined to comment.

The stock offering would mark a milestone in chief executive German Gref’s four-year drive to transform the lumbering former Soviet state savings bank into a highly profitable universal bank with international ambitions.

Investors, including those who already own Sberbank shares, say the timing of the secondary offering is good, with markets in a positive mood after the European Central Bank’s massive injections of liquidity into the banking sector.

“The markets are normal now, with a positive outlook on Russia,” said Alexander Vassiouk at Prosperity Capital Management, which has over $4 billion under management including shares in Sberbank.

“The turbulence is likely to be over, money has been printed and must be invested somewhere, and the local market is cheap.”

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Sberbank vs competitors link.reuters.com/vuf27s

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PROXY PLAY

Sberbank shares, viewed as a proxy for a Russian economy growing at about 4 percent, are traded in Moscow and have significantly outperformed those of nearest rival VTB (VTBR.MM) and other European banks since Gref took over in late 2007.

The bank has launched American Depositary Receipts on foreign bourses like London and Frankfurt to bolster liquidity.

The shares trade slightly above a threshold of 100 roubles suggested in October by Gref as a level that would clear the way for a secondary offer.

The sources did not say at what price Sberbank would place the stake. They had hinted that, if the lender wants to price the deal at 100 roubles, the stock needed to trade on markets at between 106 and 110 roubles.

Sberbank has an equity market value of around $76 billion, second in Europe behind HSBC (HSBA.L), giving the stake offered for sale a market value of $5.8 billion.

“With Russian banks remaining one of the best plays on upbeat global macro sentiment and Sberbank offering the best exposure to it, we believe that demand will be strong and the placement has every reason to be successful,” Uralsib analysts Leonid Slipchenko and Natalia Berezina said in a note.

FAVOURABLE TIME

The placement, if global markets remain favorable, will come several weeks after Sberbank reports its 2011 earnings under International Financial Reporting Standards on March 28 that are expected to be very strong.

The lender has already posted a record 322 billion roubles ($10.9 billion) in net profits for 2011 under Russian Accounting Standards (RAS), up 75 percent on 2010. Its return on equity - a key measure of profitability - reached 27.1 percent under RAS.

That beat European peers HSBC and Santander (SAN.MC), with ROE of 10.9 percent and 7.14 percent last year respectively.

“The stock is traded at a 2012 estimated price to book value of 1.5, and still offers a 6 percent discount to emerging markets peers, which we find unjustified,” the Uralsib analysts said. They reiterated their ‘buy’ recommendation on the stock.

Sberbank, which controls nearly half of Russian household deposits, has launched a cautious acquisition drive to broaden its business, buying Moscow brokerage Troika Dialog last year for $1 billion. It closed the purchase of the east European arm of Austria’s Volksbanken OTVVp.VI last month for $660 million, and plans to earn at least 5 percent of profit abroad by 2014.

STOCK OVERHANG

The stake sale, if priced at 100 roubles per share, would represent a 12 percent increase from Sberbank’s last share offering in 2007 of 89 roubles, which raised $9 billion.

It would cut the state’s stake in Sberbank, held through the central bank, to a bare majority from the current 57.6 percent.

The prospect of the sale could pressure Sberbank’s share price, which eased by 2.2 percent to 101.02 roubles on Thursday. Sberbank has been courting institutional investors to buy in to the offering.

During the sale preparations last year Sberbank executives had planned to meet Asian and Arab sovereign wealth funds to line them up as core investors in the sale, including those in China, sources said at the time.

Russia’s central bank, which has chosen Credit Suisse, Goldman Sachs, Morgan Stanley, JP Morgan and Troika Dialog to arrange the sale, declined to comment.

($1 = 29.5600 Russian roubles)

Writing by Katya Golubkova; Editing by Douglas Busvine and Mark Potter

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