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. Last Updated: 07/27/2016

Novorossiisk Raises $1Bln in Oversubscribed Listing

Novorossiisk Black Sea port raised some $1 billion in a heavily oversubscribed share float, as investors rushed to buy the stock, sources close to the issue said Friday.

Investors have said Novorossiisk, which handles exports of oil and products, grains, chemicals and container cargoes, was poised to benefit from the 2014 winter Olympic Games in Sochi as its deep-water port would handle the bulk of large incoming cargoes.

Some analysts, however, were surprised by the final price and said it looked to have been propped up by the port's strategic shareholder, state-owned Russian Railways, opening the door for a sharp correction in the coming weeks.

The port said in a statement that it had priced its Global Depositary Receipts at $19.2 -- at the top end of the pricing range of $15.2-19.2 per GDR -- and its shares at $0.26 each. The issue gave it a value of $4.9 billion, the country's biggest for a port or a shipping firm.

The company did not say how much it raised via the IPO, but a source close to the company said the firm had placed one-fifth of its stock to raise around $980 million and that the placement was five to 10 times oversubscribed.

Yet analysts said the port had been badly overpriced.

"The parameters of this placement testify to the fact that today ... [Novorossiisk] is almost the most expensive port in the world," said Vladimir Sergiyevsky, an analyst at investment firm Finam in Moscow.

One of the reasons for the high demand could have been an attempt by Russian Railways to pick up a major stake in the IPO.