"Sberbank managed to get $8.8bn [in its February rights issue] and this bank is more efficient and is the only one that can really compete head-on with Sberbank," the banter said. "Investors are looking to diversify their interests in Russia’s growing banking sector so I have no doubt there’s going to be very strong appetite for this float."
Citigroup, Deutsche Bank and Goldman Sachs are set to begin premarketing the IPO on Monday and will price it between May 10 and May 12. The leads would not comment on the deal.
The sale is expected to enlarge VTB’s equity by about 25%, and market participants have previously estimated a stake of that size could be worth $4bn.
A senior banker in London away from the deal agreed that VTB’s sale could swell to $6bn.
"It is very possible," he said. "VTB is the Rolls-Royce of this year’s Russian IPOs." He added: "The markets have recovered from their correction and investor sentiment about the emerging markets is back up."
The banker familiar with the deal also said VTB had the blessing of Russia’s central bank to issue another 25% of its capital through a second equity sale in the medium term.
If the May deal fetches $6bn, a future sale of a similar stake should raise at least that much, market participants said.
VTB is considered Russia’s most international bank. Owned 99.9% by the Russian state and used for foreign trade transactions, it has rebranded itself from Vneshtorgbank to improve its appeal to foreign investors.
It needs funds to expand in the lending, mortgage and investment banking markets in Russia and elsewhere in Europe. VTB has $49bn of assets and $27.6bn of loans.
In late March, the Moscow-based bank’s board approved the issuance of 1.73tr new shares at a nominal value of Rb0.01, giving the flotation a minimum size of $665m.
But the banker familiar with the deal said VTB should be valued similarly to Sberbank, Russia’s biggest bank, and Kazakh peers Kazkommertsbank and Halyk Bank.
Kazkommertsbank raised $846m in an IPO in November that was priced at the top of its range, valuing the bank at 4.4 times book value.
That was followed by Halyk’s $680m flotation in December, which was 10 times oversubscribed and valued the firm at 4.3 times book.
Based on yesterday’s closing share price of $3,590, Sberbank is worth 7.2 times its book value of $14bn, according to analysts at Aton Capital.
VTB’s book value is about $7.5bn, which at a multiple of four would make a 25% stake worth $7.5bn.
"If you take the valuation multiples of Sberbank, Kazkommertsbank and Halyk, they are perfectly applicable to valuing VTB," said the banker away from the deal.
"Everyone recognises that VTB is a high quality and well run bank, so you’d hope it can be valued in the same range as Sberbank," he added.
Ivan Castano