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. Last Updated: 07/27/2016

First Gazprom Shares Sold at Auction

Russia's Federal Securities Corporation, or FFK, said 2.5 million shares in natural gas monopoly Gazprom, or some 0.01 percent of the total, were sold at auction in 10 lots Wednesday.


It was the first such auction in Gazprom shares and the FFK said it marked the beginning of a normal market in Gazprom, the world's biggest natural gas producer and Russia's biggest company.


The agency said in a statement the shares, which belonged to investment companies, were sold in the closed auction at an average price of 406.6 rubles (9 cents) each, compared to a starting price of 300 rubles each.


The maximum price was 418 rubles each and there were sufficient bids for 64 lots.


"The results were not bad at all. I honestly thought the price would be around 300," said Vladimir Karpunin, a broker at TsentrInvest Securities in Moscow.


The FFK said leading securities firms including Brunswick, Troika Dialog, Alfa Kapital and a unit of Renaissance Capital took part in the auction.


It said auctions would be held regularly in future. The number of buyers and sellers, from among professional participants in the securities market, and the number of shares on offer were likely to increase.


"It is the only way that investors can be sure Gazprom will not annul share purchases," Karpunin said.


Despite its enormous power, Gazprom has shied away from the rapid development of securities markets in Russia.


The natural gas monopoly's 23.6 billion shares, each with a face value of 10 rubles, are among Russia's most illiquid stocks, because company rules say none may change hands without at least some form of directors' approval.


Karpunin said a shallow market in Gazprom shares existed and that prices had lately been around 240 to 280 rubles a share. However, it could take up to two months to re-register shares.


Fifteen percent of Gazprom shares belong to the company's workers, 33 percent were sold for privatization vouchers and 40 percent are currently state owned.


The rest have been sold on stock exchanges, to gas distribution company AO Rosgazifikatsiya or to management. The company has whetted Western investors' appetites by saying it could unload up to 10 percent abroad.


Alexander Yakovlev, head of Gazprom's securities department, said the shares sold at auction had been deposited with the FFK and that the firm had given its permission for them to be sold.


He said Wednesday's auctions were not linked with Gazprom's plans to conduct sales of its shares through its own "auction center."


Foreign investors have not been permitted to buy Gazprom shares, though dealers say some Western investors have bought small amounts through Russian nominees.


Gazprom's political significance was underlined last month when Interior Ministry Anatoly Kulikov said it was among candidates for partial renationalization to bring in funds for the army and interior ministry forces.


An official of the FFK said information about the next auction could be made available at the beginning of next week.