azprom - Russia to sell gas shares overseas.

Shares in Gazprom, Russia's biggest company, are to be offered to international investors at a price almost four times that of its domestically traded shares.

The company, the world's largest natural gas producer, will launch a two-week roadshow in Europe, North America and Asia to persuade institutional investors to take part in the offering. The company plans to sell 23.7m American Depositary Shares, each of which represent 10 ordinary shares, at a price of $14-$16 per ADS. Ordinary Gazprom shares in Russia trade at around 40 cents each.

The international offering of just over 1 per cent of Gazprom shares is expected to raise about $400m, but more shares may be made available should demand warrant it.

The final price will be determined by the level of demand in a process to be completed later this month. The depositary shares will be traded on the London stock market, its first listing abroad.

If the initial offering is successful, it will probably be followed in several years by a New York listing and a much larger international fund-raising exercise. Over the next few years Gazprom is expected to place up to 9 per cent of its shares overseas.

The placement could pave the way for a string of Russian companies to raise money abroad to meet their desperate need for capital. It would also put Russia firmly on the investment map for western fund managers.

A few Russian companies, such as Lukoil, the country's biggest privatised oil producer, have already successfully launched similar programmes. But the sheer size of Gazprom, which accounts for 7-8 per cent of Russia's gross domestic product, and its importance in the European economy, should ensure even greater international interest.

A prospectus published today to coincide with the start of the roadshow shows that Gazprom's gearing - its ratio of debt to equity - is just over 2 per cent. This is extremely low when compared with western energy groups, which have an average gearing of about 30 per cent.

Some fund managers contacted about the Gazprom deal were sceptical about the effects of possible attempts by dealers to exploit the price differential that will emerge between the international and domestic shares.

The company's advisers, however, expect dealers to try to build financial bridges between the two. The company said it would consider such attempts illegal.