Russia’s second-largest banking group, VTB, intends to buy back shares sold in a "people's IPO" in 2007 at the original offer price or almost double the current market price, Mikhail Zadornov, head of the bank’s retail arm, VTB-24, said on Thursday.
“The purchase will be made at the price of the initial public offering, i.e. 13.6 kopecks per share,” Zadornov said.
VTB share prices declined soon after the IPO and have yet to recover to the offer price. The market price is currently about 7 kopecks per share.
Prime Minister Vladimir Putin instructed state-controlled VTB last week to devise a buyback plan for the people's IPO, which targeted members of the general public. Almost 120,000 retail investors in Russia bought shares in May 2007, part of a larger offering in which VTB floated 22.5% of its stock, raising some $8 billion.
"If you believe that for some reasons it is better for you to exit these assets, I can instruct the bank’s management to think about a share buyback scheme from minority shareholders so that you do not sustain any losses,” Putin told participants in the Russia 2012 Investment Forum, addressing VTB minority shareholders.
VTB CEO Andrei Kostin said that the plan to buy back shares from some 115,000 minority shareholders was valued at 15-18 billion rubles ($480-580 million).
“This is a serious issue. I want Russian citizens who acquired these assets, and this is the asset in which the Russian government holds a controlling stake, to know that we’ll do everything possible to ensure that they do not incur losses,” Putin said.
