Tough sell

7 February 2011 By Jason Bush

The launch of a global offering for 10 percent of the stateowned lender follows the failure of an attempt to sell the stake through a private placement. Russia will probably find buyers. But investors are rightly wary about VTB’s valuation and risks.

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The Russian government began an international roadshow for the global offering of a 10 percent stake in VTB Bank on Feb. 7. The transaction is expected to close before the end of the month. The government is looking to reduce its stake in VTB to 50 percent plus one share over the next three years, from the current 85.5 percent.

Italian insurer Generali Group has expressed an interest in acquiring $300 million worth of VTB shares in the course of the offering, according to a copy of the bank's prospectus seen by Reuters. Affiliated funds of U.S. private equity firm TPG Capital will buy shares worth $100 million, the document showed.

Russia had previously been in talks with TPG over the sale of the 10 percent stake in a private placement, first reported last September. Banking sources told Reuters that plans for the direct sale were abandoned because TPG objected to a lockup provision requiring investors to hold the shares for at least three years.

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