By Oksana Kobzeva and Olga Popova
MOSCOW (Reuters) - Russia's sale of a $5 billion stake in Sberbank
Marker sources said on Tuesday the banks in charge of selling the 7.6 percent stake in Europe's third-biggest lender by equity value were quoting a price of 92-94 roubles per share, and the offering was two times oversubscribed at that level.
While below the government's original hopes for 100 roubles per share, it is up from the 91 roubles that Sberbank set as the minimum bid, and indicates strong demand from investors.
"We like Russia," said one investor, which holds a small stake in Sberbank and aims to buy more.
"Just on simple valuations it is one of the cheapest markets in the world. In investing there, we are trying to be more exposed to the domestic consumer."
Russia's economy is growing at around 4 percent, providing a healthy backdrop for Sberbank compared with most European lenders, although growth has been slowing as the euro zone debt crisis saps demand for oil and gas.
Having delayed a sale due to volatile financial markets, the Russian central bank has seized on a market rally prompted by stimulus measures from the U.S. and European central banks to cut its 57.6 percent stake in Sberbank through a placement of shares in Moscow and global depositary shares (GDS) in London.
It will retain majority control with a stake of 50 percent plus one share.
Sberbank plans to close the order book at 1330 GMT on Tuesday, one source close to the deal said. The GDSs could start trading in London as early as Wednesday.
The pricing guidance indicates a discount of 3-5 percent to Sberbank's 97.05 rouble close on Friday, and values the 1.71 billion shares being sold at $5.14-$5.26 billion. Sberbank's shares were down 0.1 pct at 95.5 roubles on Tuesday.
The discount is less than the approximate 10 percent seen on the government's sale of a stake in Russia's No.2 bank VTB
The long-awaited Sberbank offering has revived hopes for Russia's stalled privatization program.
It will also clear a share 'overhang' and allow investors to focus on Sberbank's underlying value, chief executive German Gref told Reuters on Monday.
Gref has been courting Asian asset managers to back the deal, while local reports say U.S. private equity group TPG, already an investor in VTB, may buy Sberbank stock.
THIS YEAR'S "HOTTEST OFFERING"?
Sberbank on Tuesday met more than 40 investors in Moscow to explain its strategy and take questions, according to one investor present. It will do similar meetings in London and New York during the day.
"Sberbank's retail network has a huge advantage, it attracts huge deposits compared with other banks in Russia and that is a big advantage in terms of margins," said Bruce Bower, a portfolio manager at Moscow-based fund manager Verno Capital.
"Sberbank has the best footprint and the presentations (today) confirmed that too," added Bower, whose fund is already a Sberbank shareholder and was waiting to hear how much stock it would be allocated in the offering.
The former Soviet state savings bank enjoys cheap funding through controlling 46 percent of Russian household deposits and has the implicit backing of a sovereign with low debts and the world's fourth-largest gold and foreign currency reserves.
It has net interest margins of over 6 percent and a return on equity of 26 percent - one of the highest on the world.
It has also snapped up cheap foreign banking assets, most recently buying Turkey's Denizbank for $3.6 billion, although it has said it is not pursuing any further takeovers abroad for now, after criticism from analysts that it was taking its eye off the ball in Russia.
At an estimated price-to-book value for 2012 of 1.3 times, it is valued at a 15-20 percent discount to other large emerging markets banks, Bank of America Merrill Lynch analysts estimate.
"We think the deal will become the hottest offering of the year and not just in the Russian space," wrote Milena Ivanova-Venturini, analyst at Renaissance Capital, in a research note.
Analysts at Uralsib suggest Sberbank's success could come at the expense of VTB, which is expected to publish not "very bright" second-quarter earnings this week.
(Reporting by Oksana Kobzeva, Olga Popova, Katya Golubkova, Kylie MacLellan, Tommy Reggiori Wilkes and Megan Davies; Writing by Megan Davies; Editing by Douglas Busvine and Mark Potter)
