Russneft raises $500m in IPO

Russneft, the Russian oil producer in which Glencore holds a 25 per cent stake, has raised 32.4bn roubles ($502m) in an initial public offering on the Moscow Exchange, the company said on Friday.

Russneft, which is Russia’s seventh-largest oil producer by volume with an output of about 150,000 barrels a day last year, said it had sold 20 per cent of its ordinary shares at 550 roubles each in the flotation, valuing its ordinary equity at $2.5bn. Including preference shares, the stake sold in the flotation was equivalent to 15 per cent of the company’s total equity capital, it said.

The deal values Glencore’s stake in the oil company at about $830m — above the $685m at which it was valued in the company’s most recent annual report. Glencore swapped $984m of loans to Russneft and equity stakes in Russneft subsidiaries for its stake in the Russian oil company last year.

Mikhail Gutseriev, whose family holding company is the largest shareholder of the company with a 60 per cent stake after the listing, had said this summer that the company could be valued at $4bn-$5bn.

Both Glencore and Mr Gutseriev have agreed to a 180-day restriction on selling their shares.

Mr Gutseriev, whose net worth is estimated by Forbes at $6.5bn, said that the offering had been oversubscribed by 30 per cent and that it had attracted applications from more than 2,000 retail investors.

He said:

In the last few years Russneft has achieved significant results both in terms of production and financially. At the same time the company’s development strategy envisages significant potential for hydrocarbon output growth, which together with the benefits of the status of a publically-traded company, allow us to look to the future with confidence.

VTB Capital and Sberbank CIB were global coordinators of the IPO, with brokerages Aton and BCS as joint bookrunners and EFG Asset Management and IT Invest as co-lead managers.