Banks Buy Rosneft Stock
The banks that organized the Rosneft initial public offering have decided to exercise their option to purchase 53 million Rosneft GDR at their price of placement ($7.55 each). The organizers of the IPO include Morgan Stanley, ABN AMBO, Dresdner Kleinwort and JP Morgan. A Kommersant source said that the banks have six months to buy the stock if they choose to. They had until August 12 to announce their decisions. If they buy all 53 million shares, the state share in Rosneft will be reduced from 85.2 percent to 84.8 percent.
The stabilization period for the stock ended on Saturday. In that period, trading was supported on the London Stock Exchange, RTS and MICEX. Unofficial information has it that about $200 million was spent in London to stabilize the price of Rosneft stock. Analysts say that the end of that support may mean a fall in the price of the stock.
Morgan Stanley was the main force behind the stabilization of Rosneft stock in London. In Russia, Deutsche UFG supported the stock on the RTS and Aton on MICEX. Analysts note that no great activity was required for that purpose from those banks. Rosneft stock had a significant lead over the RTS index by the end of the stabilization period, while LUKOIL stock, with which Rosneft is being compared, rose with the index. The capitalization of Rosneft grew by $300 million in that period, and the capitalization of LUKOIL grew by more than $7 billion.
Under the stabilization agreement, the organizers of the IPO could make deals with the with the goal of “maintaining their market price at a higher level than would have prevailed on the open market in other circumstances.” Analysts say that no action was really necessary by the banks, which were motivated by image-making factors. The banks guaranteed the rising price of the Rosneft stock by demonstrating their confidence in it. The withdrawal of that support can lead to a fall in the price of the stock. “Quotations will fall,” said Roman Andreev, vice president of Center Invest Securities. “When the marketmakers leave, the speculators, about 10 percent of the participants in the IPO, will begin to sell the notes in an attempt to get their funds back, understanding what can happen when a major player leaves the market.” Kommersant has obtained information that the IPO organizers will not stop buying Rosneft shares after the stabilization period.
Natalia Skorlygina, Denis Rebrov, Vitaly Gaidaev
All the Article in Russian as of Aug. 14, 2006
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