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Moscow - Russia sold a 16% stake in state diamond miner Alrosa at the bottom of a planned price range on Monday, highlighting the lack of progress in a state privatisation drive that was supposed to net $13bn this year.
The stake in Alrosa, which vies with De Beers for the mantle of the world's largest diamond producer, is the Russian state's only sale this year and one of the 10 biggest in Europe so far this year.
But the low sale price prompted some analysts to suggest it had been a struggle to place all of the shares on offer, adding to the delays or false starts that have hampered the plan to generate $13.44bn from sell-offs this year.
Originally plannned
Alrosa's offer price of about $1 per share, putting the company's market capitalisation at about $8.12bn, was at the bottom of the projected range of the $1 per share.
"At least they got something, but not that much, and it was way below what they had originally planned," said Uralsib economist Alexei Devyatov.
"There is no clear political will in the government to do the privatisation ... They don't fulfill their own plans."
Prime Minister Dmitry Medvedev in 2010 laid out a programme of sales aimed at drawing more investment and energy into the state sector and revitalising the weaker areas of a $2.1trn economy now growing at its slowest pace in four years.
Global economy
But, as many analysts predicted at the time, government has since proceeded to slash the privatisation targets, unable to reach a consensus on deadlines for sales and hampered by officials who argue a weak global economy makes this the wrong time to sell some of the prize assets on offer.
Sales of shipping group Sovcomflot, a stake in oil monopoly Rosneft and Russian Railways had all been on the cards for this year, according to plans from October last year. A year on, only Alrosa has been completed.
Russia's First Deputy Prime Minister Igor Shuvalov said on Monday that the pricing of the Alrosa sale showed a robust level of investor interest.
"There was a proposal to set a lower price limit, but we took a risk and set the price at about $1...both the oversubscription and the quality of investors show that the decision was correct," Shuvalov said, speaking at a ceremony to launch the sale at the Moscow Stock Exchange.
Biggest buyers
Two sources close to the deal said that the order book had been oversubscribed by between 30% to 40%, while other market sources said US investors had been the biggest buyers of the shares, purchasing up to 60% of the stake.
Russian investors accounted for around 14%.
Buyers included US asset management group Lazard and investment firms Capital, Highbridge, OppenheimerFunds and Pimco, as well as a state-backed fund, the Russian Direct Investment Fund, whose mandate is to co-invest with private partners.
Traders can start dealing in the shares late on Thursday.
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