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Diamond monopoly Alrosa, the latest company set to test the recovering sentiment for Russian equity sales, completed its IPO on the Moscow Exchange on October 28. Although it's a unique name, the company was still forced to the price the deal at the bottom of the range.

The company set a final price of RUB35 per share on October 25, and reported early on October 28 that it has sold the full issue. The Russian government and the Yakutia Republic each sold 7%, while Wargan Holdings, an Alrosa subsidiary, put another 2% on the block. At the low end of the RUB35-38 initial guidance, the IPO saw the company raise RUB41bn ($1.3bn) for the 16% stake.

That makes it the biggest sale of Russian equity since Sberbank sold a 7% stake last year. To some extent then, the listing looks like it is taking full advantage of the window of opportunity for Russian equity issuers. The miner follows Tinkoff Credit Systems into the market, with the "virtual" bank having raised just over $1bn in Moscow earlier this month. However, TCS is also a privately run company in a sector still relatively under-represented on the equity markets. Alrosa, on the other hand, remains controlled by the federal and regional authorities; the government holds 43.9%, while Yakutia maintains a 25% blocking stake. Various Yakutia municipalities hold another 8%, and another 7% stake was held by "other legal entities and individuals".

At the same time, whilst Alrosa dominates the Russian diamond market and therefore offers investors unique exposure to some degree - a strong driver for Russian equities in the recent past - it's still a metals and mining company selling raw materials it digs out of the ground. Representatives of Russian heavy industry, and particularly those linked to the extractive industries, have been struggling to attract the (generally high) pricing they seek from equity investors since the start of the crisis in 2008.

"The placement will be held at the lower end of the guidance range. Taking into account the current state of the bid book, the company will barely sell its shares at a higher price. It needs oversubscription for this, which it does not have," an unnamed source told Prime just ahead of closing the IPO.

Even less positively, it appears Alrosa was forced to depend on state support even to reach that level of demand, having opened the bid book on October 14. The state's Russian Direct Investment Fund (RDIF) and other state-run funds are reported to have bought at least RUB6.3bn worth of the shares.

The float is also a disappointing re-start of the government's privatisation drive. Earlier earmarked to sell up to $50bn worth of state-owned shares, that programme has been on hold for much of this year due to the poor performance of Russian equities. The finance ministry had originally planned to see revenue of $13.5bn from equity sales in 2013, but trimmed its forecast to just $1.5bn.