Facebook selling from Moscow

IPO of the world's largest social network aroused the interest of the ordinary Russians: the brokers have already attracted applications from the public at $ 23 M. However, not everyone will be able to receive the Facebook shares.

The two largest Russian retail brokers, Finam and BCS, attracted more than 1,000 applications for the purchase of Facebook shares, its IPO on NASDAQ is to take place on May 17. Finam has received 524 applications (an average of $ 15,000), said the company president Vladislav Kochetkov. The applications to the BCS were filed by about 500 people estimating at about $ 15 M, according to Aleksey Ivin, the head of brokerage services in the international markets.

The minimum size of an application for both companies is $ 10,000. Finam’s brokerage commission takes 1% from the sum, BCS’s - 0.764%.

Vedomosti didn’t manage to find other brokers offering clients the participation in placing the world's largest social network. The representatives of VTB 24, Savings Bank, Troika Dialog, Aton and Discovery said they did not offer such a service to customers. There were such ideas from IT invest, but then they were rejected, said Vladimir Twardowski, the company CEO.

We don’t see any interest from retail customers, and as we are not a syndicate member, it is difficult for us to facilitate their participation in the Facebook IPO, - says the Renaissance Capital representative. The interest of Russian investors, both institutional and retail, to the Facebook IPO is minimal, says Yuri Mintsev, FC Discovery managing director. The same was said by the VTB 24 representative. We do not offer in an organized way, but if someone wants to, we will try to help, - said Viktoria Denisova, the Aton’s deputy director on working with retail customers.

I cannot recall the Russian retail brokers massively offering the public to participate in the IPO of a Western company, - noted Alexander Svintsov, KIT Finance General Director.

Finam gave access to the IPO for Zynga and Groupon, said Kochetkov, the activity was high, and hence the idea of mass offers to participate in the placement of Facebook, as it's the loudest of all the IPO to take place in the coming years.

The network with about 700 M users estimated itself at $ 77-96 B, say the documents for an IPO filed by Facebook to the U.S. Securities and Exchange Commission (SEC). Last year’s revenue of the company for the US GAAP amounted to $ 3.7 B, the profit - $ 1 B.

According to Bloomberg, now only two of the investment banks appropriated the recommendation on the Facebook shares, and both - to buy.

The shares of another social network, LinkedIn, rose up to 109% on the first day of trading but soon began to decline. Now LinkedIn’s capitalization is 80% which is more than the last year’s IPO result.

It is due to such speculative considerations that Finam encourages participation in the Facebook IPO, marks Kochetkov.

However, not everyone who has applied to the Russian brokers will receive shares. Finam’s applications for Zynga and Groupon shares were not satisfied, said Kochetkov, and now we can not guarantee that the requests will be satisfied.

When a large oversubscription, the Russian applications are ignored, he notes, so it's good, if 20-30% will be granted, and ideally - about 50%. It is easier for the organizers to sell significant amounts to the major purchasers than to spray the block between small customers, explains Ivin. As the practice shows, there can be negative nuances, especially Russian brokers’ applications dissatisfaction - said Denisova from the Aton.

Russian companies are the clients of the third circle for virtually all of Western investment banks, - Kochetkov complained - but we are negotiating with them, try to get into the book. This time, some amount is to be received, he hopes, but what it will be is not yet known.