The press, both Russian and western, is upbeat on the Rosneft IPO. Today's report in the FT is a good example;
“People close to the IPO on Tuesday expressed confidence in the deal, saying the order book would close on Wednesday, a day earlier than planned.”
And the FT's Monday back page again made reference to the Caveat Emptor string of posts, commenting, in particular, on my last and very short post (something about having a day job) where I suggested that “beware was overcoming buyer.”
I stand by my point but will remake it. There is no way that the Rosneft IPO would be populated by Abramovich, BP, Temasek et al, if institutional buyers were lining up to buy. As the Lex column points out - “with friends like this who needs enemies?” An institutional investor buys a share and waits for/expects capital appreciation. BP et al buy a share and expect something else - a pipeline from Kovytka, for example. The value of the option is probably/undoubtedly greater than Rosneft's overpricing. The Kremlin will not enjoy having to make unrelated agreements to get the IPO done. And mostly they won't enjoy it because it is their preferred negotiating strategy. In case my point is not clear - the Rosneft IPO was over-priced and under-supported. Favours have been called in, Abramovich, and agreements have been made, BP, to get the deal done. The book maybe oversubscribed but if one “strategic” backed away at the last moment there would be a gaping hole and very few institutional investors to fill the gap.
The short-selling hedge funds must be licking their lips at the prospect of a large company with a very small real float and investment banks who will be desperately trying to support the price. Expect first day/week volatility. I would not be surprised if many of the specialist Russia/EMEA/energy funds are sitting on the sidelines waiting to pick-up stock at closer to fair value at some point in the near future.
I have no evidence for any of the above.
[composed and posted with ecto]