Novatek Sells Its Shares

The London stock market's Russian season is set to continue on Thursday when trading opens in newly listed gas producer Novatek, which investors have been queuing up to buy, Cbonds.info reported.

Novatek plans to offer up to 19 percent of its shares in the public placement to raise up to $966 million, with an initial 17 percent this week plus a "greenshoe" option at its bankers' discretion a month later.

"The book is extremely well covered throughout the price range," said one source close to the offering, adding that the book was closed except in Frankfurt, where the roadshow would continue until 7 p.m. local time on Wednesday.

Aton brokerage said in a research note that the issue was oversubscribed somewhere between six times and more than 10 times. "We find the strong appetite for a new Russian offering a very positive development not only for Novatek but also for the broader market, as it suggests strong potential demand for high-quality, new Russian issuers."

Novatek, which has a small listing in Moscow, has set a price range of $14.75 to $16.75 for the Global Depositary Receipts placement. A local share would be equal to 100 GDRs.

The firm is a fast-growing producer of gas and condensate, and wants to double output in the next few years to 50 billion cubic meters per year -- equal to France's annual gas consumption.

Since finalizing plans for a London listing in mid-June, its local shares have jumped from $1,290 to close at an all-time high of $1,810 on Wednesday, up 6.5 percent on the day.

Novatek is offering 524,453 shares held by SWGI Growth Fund, one of the funds through which a handful of managers control the firm, led by chairman Leonid Mikhelson. He directly or indirectly holds 35.5 percent, worth $1.6 billion to $1.8 billion using last week's valuation.