(MENAFN - AFP) The world's top diamond producer Alrosa announced on Wednesday that it would float 16 percent of its state-held shares as part of the Russian government's ongoing privatisation campaign.
A stock valuation released by one of the Russian banks involved in the issue on Moscow's MICEX exchange has put a price tag of about 1.4-1.6 billion (1.0-1.2 billion euros) on the stake.
"We expect that the offering will help to reinforce our unique position in the global diamond industry," said Alrosa chief executive Fyodor Andreyev.
"We also expect that the offering will expand our access to the international capital markets and help to unlock the value of the company."
Alrosa had remained one of Russia's most secretive companies despite its global ambitions and long history of providing the federal government with budget revenues at times of economic malaise.
It has harboured global ambitions and is keen to find the resources necessary to launch new long-term mining projects.
Russian media said a fund linked to South Africa's De Beers diamonds miner and trader as well as some top Chinese investors have already expressed interest in the shares.
The east Siberian firm accounts for roughly a quarter of the world's diamond production and has reported reserves of 1.28 billion carats.
But the company had been riddled with debt and criticised by analysts for opaque accounting practises.
More than 90 percent of the firm is held either by the state or the local authorities of Sakha -- the diamond-rich region where the firm is based -- while another nine percent is traded over the counter.
Alrosa's partial privatisation has been delayed for years because the state had viewed the firm as a strategic asset in which foreign ownership was unwelcome and potentially dangerous.
It now represents an important part of a Russian privatisation drive that has been slowed by global economic worries and falling prices on the MICEX exchange.
President Vladimir Putin's government intends to raise about 1.9 billion from state asset sales this year -- a figure that makes a successful Alrosa flotation vital.
"This offering marks an important milestone for both Alrosa and the ongoing privatisation programme of the Russian Federation," said Federal Agency for State Property Management head Olga Dergunova.
"The company's privatisation... is a landmark step in the implementation of the government's policy of reducing the state's role in the economy."
"This is generally a positive for the company because it ... promotes its growth," said Societe Generale's mining analyst Sergei Donskoy.
"But there has been little diamond demand in the past three years," he cautioned. "I put the company's price at the lower end of the valuation."