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. Last Updated: 07/27/2016

Sitronics Priced at Lower End

Russia's first high-tech initial public offering fell short of expectations Wednesday, as the firm, Sitronics, priced shares at the bottom of the expected range, giving it a market value of about $2.3 billion.

Sitronics, owned by services conglomerate Sistema, said it was selling shares at 24 cents each and Global Depositary Receipts at $12, at the bottom end of an indicative range announced last week.

Sitronics said in a statement issued through the London Stock Exchange that it had raised $352.6 million. That was well short of earlier company guidance of $500 million to $550 million.

"Of course it could have been better," Interfax quoted Sistema's core owner, billionaire Vladimir Yevtushenkov, referring to the IPO.

Analysts said Sitronics had been fairly valued by the market, howver.

"Sitronics' valuation is fully realistic. A higher capitalization would have meant overvaluing the business," said Nadezhda Golubeva, an analyst at Aton brokerage.

The offering comprised 1.68 billion ordinary shares, including 1.55 billion newly issued stock and 125 million shares sold by chairman Alexander Goncharuk; Gennady Krasnikov, head of the company's microelectronics solutions division; and Alexander Titov, a former Sitronics manager.

The fact that managers sold shares did not help push the price higher, said a Western banker who requested anonymity.

"The quality of the asset is low. It effectively consists of telecoms equipment which is mostly sold to Sistema," he said. "I have a feeling it cannot exist as an independent business."