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| Sberbank | |
| Size | $5.21 billion equity follow-on |
| Global coordinators | Credit Suisse, Goldman Sachs, JPMorgan, Morgan Stanley, Sberbank CIB |
| return to the Emerging Europe Deals of the Year index | |
In terms of broader market impact, however, no deal from CEE last year could compare with Sberbank’s $5.2 billion secondary equity placement. Although not the autumn’s only successful bank privatization – the Turkish government also achieved high levels of oversubscription for its sale of a TL4.5 billion ($2.5 billion) stake in Halkbank in November – the Sberbank offering gets the nod for single-handedly reviving the region’s moribund primary equity markets, paving the way for subsequent deals, such as Megafon’s $1.7 billion IPO.
That it was able to do so in such a convincing manner, however, was not merely because of the sheer scale of the offering – the largest equity placement from Russia since 2007 and the third largest ever from an EMEA financial institution – and the visibility of the name, but also to textbook timing and execution on the part of both the seller and the syndicate banks.
With a further $55 billion of privatizations in the pipeline, achieving optimal pricing was a priority for the Russian authorities, and they waited patiently through more than a year of adverse markets for a suitable issuance window. “It was important for the Sberbank offering to get done and get done well in order to open the way for the next round of transactions to take place, both in the context of the privatization programme and also in the context of the Russian capital markets as a whole,” says Richard Cormack, head of EMEA emerging markets ECM at Goldman Sachs.
As external conditions improved in the summer, the decision was taken to approach the market in the autumn and the final choice of September 17 was scheduled to avoid potential macro noise around announcements out of Germany and the US earlier in the month. Even then, marketing for the jumbo placement – which comprised simultaneous listings in London and Moscow, a market first – was compressed into just one-and-a-half days to minimize exposure to potential market volatility.
“Because the stock is very well known and the banks involved all know the investor base very well, we felt we didn’t need an extensive roadshow schedule and that it was more important to take advantage of the window of opportunity that opened, and get in and out of the market quickly,” says Nick Koemtzopoulos, head of ECM for EMEA emerging markets at Credit Suisse.
The strategy paid handsome dividends, with the offering achieving a high level of oversubscription and pricing at a discount of just 4.1% to the pre-announcement price. Partly, this was due to the stars aligning in the previous fortnight with the announcements of outright monetary transactions from the European Central Bank and a third round of quantitative easing by the Federal Reserve.
For Mickael Gibault, co-head of corporate finance at Sberbank CIB, however, the deal’s success was attributable to “a combination of excellent preparation and selling a top-quality story” rather than external market conditions – a claim that is substantiated by the stock’s remarkable aftermarket performance. By early January, Sberbank shares were up 5.7% on the secondary public offering price of R93, outperforming both the Micex index and closest domestic peer VTB.
“Due to its size and visibility, the Sberbank offering represented not only a revitalizing event for Russian capital markets but also a landmark development for the whole EMEA region,” adds Gibault. “It sent a very strong and confident signal for large issuers in particular, going into 2013, in terms of their ability to successfully access the international equity capital markets.”
