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The best deal of my entire career

Ruben Vardanyan Troika Dialog Manager

Date: 19 September 2012

Source: Gazeta.Ru

Ruben Vardanyan tells about the Sberbank privatization deal

Ruben Vardanyan, President of Troika Dialog, the coordinator of Sberbank’s recent SPO, shared with Gazeta.Ru that he considers the deal the most successful of his career. And given the high demand for the shares of the state-controlled bank, the window for new placements this year is not closed, added Vardanyan.

What is your assessment of the Sberbank placement?

I consider it to be the best deal of my entire career as an investment banker. This is the case for a number of different reasons: timing, number of investors, the structure of the deal. It was one of those situations where both the seller and buyer walked away satisfied. The deal was viewed very positively by outside observers. Also I want to mention how diverse the clients were. If you can talk about such a thing as an ideal sale, that was it.

You weren’t disappointed that the upper boundary of the price range was not achieved?

No, quite the opposite. It was a unique discount both for the issuer and the Russian market – just 1.9% to the spot price per local share. No Russian company had achieved such tight pricing. Usually the discount runs 5-10%. Furthermore, you shouldn’t arrange a deal in such a fashion that investors can’t earn anything themselves. That’s not right. So a minimal discount is fair.

How many new investors did Sberbank acquire from the deal?

Quite a lot. More than three hundred. Some of them were already Sberbank shareholders and some of them weren’t. It’s an enormous group of clients that have different views on Russia and manage funds of different sizes.

How many bids for large blocks of shares were you able to fill?

It was a completely evenly distributed placement. There were no anchor investors.

Which major foreign institutional investors obtained stakes in Sberbank?

That information cannot be disclosed. And in any case, the point isn’t which names were involved, but the fact that new money has come into the Russian economy.

Were there Russian investors involved in the placement?

Yes, there were Russian clients who participated in the SPO, including through the Moscow exchange. This was the first placement in which investors in both Moscow and London have been able to simultaneously participate.

Were Suleyman Kerimov, Vadim Moshkovich, and Filaret Galchev among them?

We can’t comment on that.

Only 3% of the shares offered were sold on the Moscow exchange. Why is that?

The placement went very quickly here and there wasn’t a big publicity campaign for it. Don’t forget that this is the first time a parallel placement had been held on both the London and Moscow exchanges.

Does the modest offering in Moscow indicate a lack of demand for Sberbank shares in the domestic market?

No, that’s not it. The issue is the size of our market. Given that 3% of the total amount of an offering which exceeded $5 bln is more than $150 mln, that’s a very good number for a developing exchange.

Beforehand, however, it had been announced that Moscow would make up 10% of the total offering.

That wasn’t the announced size of the offering, but rather the maximum amount that could be bought, but may not be.

Did you have a preference for any particular group of investors?

No, for us all investors are equal.

The share of Sberbank securities circulating in Western markets as depository receipts is near the legally established maximum of 25% of the total number of shares. How is Sberbank going to solve this problem?

It can only be solved by changing the law and increasing the share of depository receipts in total shareholder capital.

You are in a work group dedicated to creating an international finance center (IFC) in Moscow. Do deals such as Sberbank’s placement have any influence on the development of the IFS?

Of course. Deals like this stimulate the infrastructural development of the local market, including from a technological standpoint. Ultimately, this should lead to most placements being made in the local market, with participation of not only Russian but also international investors. In this case, we won’t have to go to Western markets in order to find investors from all over the world.

Do you think that the opportunity will present itself for other companies to hold placements this year? Is the window still open?

I think so. The oversubscription achieved by Sberbank shows that investors are ready to invest in attractive Russian companies that have clear prospects for growth.

Is this your last deal as part of Sberbank?

Why would it be? It’s the last deal as a part of Troika Dialog, the last time the company’s logo will be featured in connection with a placement. It’s symbolic that the last deal we did before the final merger with Sberbank was a placement of Sberbank shares. We do have a lot of mandates for a wide variety of deals and we hope to be able to continue to build on our advantage. We have already done a lot in that regard.

Do you regret that the Troika Dialog brand will no longer exist?

I am very proud of what was accomplished during the Troika era. Now new possibilities are opening up for us, the beginning of a new stage. The future will be interesting.

You said that Sberbank has a lot of mandates. What are these projects?

I can’t say. You already know about some of them, they’ve been announced. (Sberbank’s investment block, into which Troika Dialog was integrated, is planning to serve as market maker for MegaFon’s IPO – Gazeta.Ru)

Your contract expires in 2013. When are you going to leave the company?

It hasn’t been definitively decided. I will be working at least until January 1, 2014, when the second phase of the deal between Sberbank and Troika Dialog will be completed.