Sovcombank Russia - Western-sanctioned bank - has set its price for the IPO

Russian lender Sovcombank has priced its initial public offering (IPO) at 11.5 rubles ($0.13) per share, the latest in a series of small listings by Russian companies in 2023, Reuters reports.

Sovcombank's planned market debut reflects a valuation of up to about $2.5 billion, highlighting the currently limited scope of Russian listings and the dominance of state lenders in Russia's banking sector.

Three state-owned banks account for more than 50% of Russia's banking sector assets. In early October, Sovcombank, one of Russia's 13 systemically important credit institutions, announced that its shareholders would consider listing at a meeting on 25 October.

"Sovcombank has been preparing for an initial public offering for many years," Sovcombank's press office announced at the time, noting: "The listing deadline is the one in which there will be a window."

The bank registered for an additional share issue in March 2020 in anticipation of an upcoming IPO that did not materialize. Banking sources told Reuters in early 2020 that Sovcombank had hired global banks to prepare the listing.

Sovcombank was subject to US, UK and EU sanctions shortly after Russia launched what it calls a "special military operation" in Ukraine.

• Sovcombank plans to raise $112 million through IPO

Sovcombank plans to raise 10 billion rubles ($111.93 million) through its IPO on the Moscow Stock Exchange. Trading of the shares is expected to begin on December 15.

The capital raising, in an offering consisting only of additional shares for a 4 percent free float, is a far cry from the billion-dollar listings Russia had before launching the conflict in Ukraine in February 2022, according to Reuters .

Alfa Bank analysts claim that the fair value for Sovcombank would be approximately 319-407 billion rubles.

They mention: "The potential of granting large dividends is an important factor in the investment attractiveness of the bank".

Sovcombank said, according to Reuters, that it could pay up to 50% of its 2023 profit in dividends after the listing.