Translated material
VTB has chosen a corridor
The bank determined the preliminary price for placement of shares
The VTB Supervisory Board has determined a preliminary price corridor for the placement of shares . According to a source close to the bank, it will range from 11.3 to 12.9 kopecks. per share. Banking analysts consider the proposed price justified, although until recently many of them expected it to be less. But the final placement price will be known only on May 11 after the results of the subscription to the shares are summed up.“VTB’s supervisory board decided to set the placement price corridor for the bank’s share at 11.3-12.9 kopecks,” a source close to the bank told reporters yesterday. According to another interlocutor working at VTB, the bank will place a 22.5% stake, which will allow it to attract more than $6 billion. If we focus on the stated price corridor, the bank will be able to attract $6.9-7.8 billion.
The VTB press service hastened to refute the information. “The issue of the placement price of the bank’s shares was not considered by its management bodies. The decision on the placement price will be made after the completion of the application collection procedure . The estimated price range for the placement will be published no earlier than April 25, and all other statements and opinions regarding the possible price of shares should not be considered as official and reliable information,” the VTB press service said in a statement.
Indeed, the official announcement of the preliminary share price will take place on Wednesday, April 25, and the final placement price will be determined on May 11, after the order book is closed. According to the prospectus, the bank will issue 1.7 trillion new shares, which will correspond to 24.9% of the updated authorized capital. But some of them will be needed to exchange for shares owned by minority shareholders of the Industrial Construction Bank. How and when the exchange will take place is still unknown. It is expected that the bank will place 30% of the additional issue of shares on the Russian exchanges RTS and MICEX (they are already included in the “B” quotation lists of both exchanges). 70% of the additional issue will be placed on the London Stock Exchange in the form of depositary receipts. The road show for Western investors will begin tomorrow and last until May 10.
“Even if a different price is announced later, it will not differ much from what is announced now,” says Polina Lazich, an analyst at Ak Bars Finance Investment Company. According to her assessment, even if VTB shares cost 15 kopecks upon placement, they will still have potential - the bank's own capital will almost double after the placement, which will ensure business growth. “The share price is 10 kopecks. The assessment of the entire VTB corresponds to a ratio of 2.9 to current capital, which is not enough for such a bank. Price 11.3 - coefficient 3.2 to capital, price 12.9 kopecks. “3.7 capital,” says the analyst. “The proposed corridor is 11.3-12.9 kopecks. for the share I think it is quite justified. Moreover, it corresponds to our forecast of 11-13 kopecks,” says Maxim Osadchiy, senior analyst at Antanta Capital Investment Company. “At this price range, I recommend buying VTB shares: this investment seems interesting to me.” According to Mr. Osadchy, a fair price is 14.1 kopecks. per VTB share. “The securities will become the second blue chip after Sberbank. Both securities can grow better than the Russian banking sector, which is now about 40% per annum,” he is confident.
“The demand for bank shares will be very high. We can confidently predict that VTB shares will appear in the MSCI indices in August, which will become a powerful factor in the growth of the bank’s capitalization in the short term,” predicts Alexander Razuvaev, head of the market analysis department at Sobinbank.
But just a few days ago, a number of analysts stated that the price was more than 11 kopecks. per share may entail the risk of its correction after entering the stock exchange. And this danger remains, says Brokercreditservice analyst Denis Mukhin: “We noted that the desired price would be 9-11 kopecks. per share. The voiced corridor is not too expensive, but not cheap either. If there is a stable situation on the stock market in May, there is confidence that the shares will not fall in price after the placement. But if the market begins to fall, it will be more profitable to buy shares from the market than during placement.” In his opinion, there is still a lot of time before the final price is determined, and everything can change.
Overpricing can be especially dangerous when listing on the London Stock Exchange, notes Polina Lazic: “Our investors are accustomed to the fact that our banks cost more than three capitals, but to foreigners this may seem like a lot. Compared to Sberbank, VTB is less efficient, it has just begun to engage in retail and is simply less well known.”