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In a move eerily reminiscent of the series of stuttering Russian equity issues seen in both of the last two years, Promsvyazbank announced late on October 15 that it is scrapping its planned IPO in London after it failed to fill the order book at its pricing range. Russia's third-largest private bank said in a statement that "pricing indications" failed to reflect the "fair value" and that it would revisit the IPO when "market conditions improve".

Earlier on Monday, newswires reported that the book had been closed at $10 per GDR, the lower bound of the initial pricing guidance of $10-12 GDR. That would have seen it raise between $345m-$414m, which would have valued Promsvyazbank at $1.7-$2.1bn. Artem Konstandyan, president of PSB, told bne recently that the proceeds would be used to shore up the bank's capital and give it "some more firepower to continue our growth."

"Demand for the IPO was likely sluggish," reports Aton Capital "as "Kommersant reports that the book was filled only in the late hours of Monday, while a Vedomosti source claimed that the book was not filled."

The postponement sees Promsvyazbank fail in its attempt to repeat the recent successful equity issue by Sberbank, which conducted a secondary public offering in September, to raise $5.15bn. The sale of a 7.6% stake in the state giant had helped to raise interest in Russia among global equities investors recently. It was only on October 12 that MD Medical Group got off a $311m IPO in London to reinforce that optimism.

Promsvyazbank's failure to take advantage calls to mind events in both 2010 and 2011. Both years, Russian companies rushed to push through high-priced IPOs in the wake of a successful float (in 2010 it was mail.ru, while VTB and Yandex set the ball rolling last year) only for investors to baulk at the offers. The vast majority were forced to the bottom of their pricing ranges, with many pulled to leave a multi-IPO pile up on a road just outside London.

Owned by brothers Dmitry and Alexei Ananyev (via Promsvyaz Capital, which holds 88.25%) and the EBRD (with 11.75%), Promsvyazbank says it's target is to become the largest private bank in Russia by 2015. The day before it pulled the IPO, the bank posted RAS financial results for January-September, which saw net income spiking to RUB8.3bn - five times more than in the same period in 2011.

However, investors were not impressed. On top of the pricing disagreement with investors, analysts note that the overall Russian market remains stuck at the same level at which it opened the year. They also suggest that the Sberbank deal drained much of the demand for Russian banking sector stock for the meantime. In addition, the country's privately-owned banks continue to face aggressive expansion from the two state-owned behemoths.

Alternatively, the analysts suggest Promsvyazbank may look to source equity capital through private equity or a private placement. Reuters sources claim it met certain funds which expressed an interest in such a transaction during the IPO roadshow.

Meanwhile, the next test for the 2012 Russian IPO roulette is a big one. Megafon, the only one of Russia's "big three" mobile operators, is set to list in London on November 1. There has been negative newsflow surrounding the details of the float, with bookrunner Goldman Sachs pulling out, and Promsvyazbank's hiccup will do nothing to help. On the other hand, the Russian telecoms sector is one of the most developed and settled, and analysts have predicted demand should be robust at current pricing guidance.