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UPDATE 2-Russia's diamond miner Alrosa to raise $1.3 billion in IPO

Monday, 28 Oct 2013 | 3:54 AM ET

MOSCOW, Oct 28 (Reuters) - Russian state-owned diamond miner Alrosa expects to raise $1.3 billion in a share sale, a figure at the bottom of a previously announced range, in a government privatisation drive that has been hit by delays and weak investor sentiment.

Market sources said U.S. investors, including asset management group Lazard, were the biggest buyers of the shares, purchasing up to 60 percent of the 14 percent stake in Alrosa, which vies with Anglo American-owned De Beers as for the mantle of the world's largest diamond miner.

It is the government's only sale this year in a multi-year privatisation programme to boost the $2.1 trillion economy, which is growing at its slowest pace in four years.

The programme has failed so far to meet revenue targets, forcing the Finance Ministry to reduce its expectations, because of weak investor sentiment and disputes over which companies should be sold.

The ministry had hoped to get $13.44 billion from sales this year, but reduced its expectations to just over $1.5 billion - a figure the Alrosa stake has now fallen short of.

Alrosa's offer price of 35 roubles per share puts the company's market capitalisation at 258 billion roubles ($8.12 billion). It had been pegged at between 35 roubles and 38 roubles a share.

The company, which accounts for 25 percent of global diamond production by value, is selling an additional 2 percent stake of treasury shares in the public offering, which would lift the publicly listed stake in the company to 23 percent.

The book for the sale of the stake on the Moscow Exchange was closed on Oct. 25 after a two-week marketing process.