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Sberbank: The best of deals, the worst of deals

Sberbank rights issue leaves the market dazed and confused.

It says a lot about Russia that a near $9 billion rights issue for one of its banks can somehow feel like an anti-climax. When the bank in question is Sberbank however, a $70 billion behemoth, which effectively controls around a quarter of the country’s banking assets, anything less than a record-breaking deal can seem like a disappointment. But such is the enigma that is Russia and such is the phenomenon that is Sberbank.

As such an offering, which from a Muscovite perspective at least, was widely seen as poorly handled, could yet prove to be one of the best performing issues of 2007. Although Sberbank shares have more than doubled in value over the last two years some believe there could be as much as a 40% upside from current valuations. If you’re left dazed and confused by the contradictions that abound in Russia, you’re certainly not alone.

With Sberbank paying Credit Suisse and JP Morgan just 0.1% — reputedly the lowest fee in European equity capital markets history — to arrange the offering it’s perhaps not surprising that the execution somehow felt cut-price.

After a poor marketing process, which has come under a scathing attack from local bankers, the new shares were sold for Rbl89,000 ($3,394) each, raising around $8.8

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