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. Last Updated: 07/27/2016

UralSib Says It Will Hold IPO in 2008

UralSib, the country's seventh-biggest banking group by assets, said Monday that it was planning an initial public offering in the fall of 2008.

The group will offer close to 25 percent of its nominal share capital in the flotation, UralSib executive director Alexander Vikhrov said Monday by telephone. He declined to say how much the group planned to raise, however, or how the funds would be spent.

Vikhrov said shareholders had unanimously signed up to the IPO plans, adding that the share flotation would take place once the current market volatility calms down. "The exact timing will depend on the situation in the market," Vikhrov said. "We are going to wait and wait for a suitable time -- there can be no rush or speculation."

Vikhrov confirmed that UralSib was selecting managers for the flotation but added that details would only be available after "necessary procedural matters have been settled."

UralSib president Nikolai Tsvetkov is the country's 12th-richest businessman, with an estimated fortune of $8.4 billion, according to the 2007 U.S. Forbes list.

The UralSib brand was launched in 2004 out of a merger of Tsvetkov's NIKoil and several commercial lenders, including Avtobank, UralSib bank and insurance firm Promyshlenno-Strakhovaya Kompania, or PSK.

The corporation's entire assets are currently valued at 316.1 billion rubles ($12.7 billion), Interfax's economic analysis department said in a report. According to analysts' estimates, a 25 percent share float would enable the company to raise $300 million to $400 million.

UralSib is one of a number of privately held lenders that have recently declared intentions to raise funds through an IPO, including Bank Zenit, which is partly owned by oil company Tatneft, and Bank St. Petersburg, one of the country's leading regional banks.

Bob Kommers, a banking analyst at UBS, said many Russian banks were primed for expansion but, in the absence of strategic investors, most saw IPOs as their best bet for securing finance.

Revenues generated by UralSib's listing would go into expanding the various businesses in the group, Kommers said. Its capitalization is at risk of coming under pressure, however, as capital expenditure has been growing faster than the return on equity, he said. "Privately owned Russian banks may also need to reevaluate their flotations because of the present credit crunch in the liquidity market. Raising equity is an expensive way to raise money" for growth, he said.

But Maxim Osadchy, an analyst at Antanta Capital, suggested that LUKoil CEO Vagit Alekperov's withdrawal from UralSib last year might have drained its assets, prompting it to resort to a public offering.

In a development in the separation of businesses between Alekperov and Tsvetkov, LUKoil last month announced that Alekperov had bought $1.4 billion worth of the oil firm's stock, Kommersant reported. LUKoil said Tsvetkov had sold off $1.2 billion worth of stock in the company, the paper reported.

"The announcement of the IPO coincides with the conclusive stage of Alekperov's departure as a key shareholder," Osadchy said. "This could bleed [UralSib] of assets."