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The Moscow Exchange was priced Friday at $4.2 billion in a disappointing flotation that valued Russia's main bourse at the lowest end of its own estimates.
The valuation was a blow President Vladimir Putin's efforts to transform Moscow into a global financial centre and underscores analyst mistrust of a bourse now mired by low volumes and regular trading in just a few big stocks.
The exchange -- formed in a 2011 merger of the MICEX and RTS trading floors -- said the price for the initial public offering had been set at 55 rubles after a 10-day roadshow in Moscow and abroad.
The upper end of its initial 55-63 ruble-per-share range would have valued the company at $4.6 billion (3.4 billion euros).
The stock slipped to 54.70 rubles at the open before clawing back losses and trading at 55.07 at 1100 GMT.
Company officials put a brave face on the situation by pointing out they met their main goal of raising $500 million that will go toward IT improvements and boosting the capitalisation of its clearing subsidiary.
"What we are selling is more than just our organisation," said Moscow Exchange board chairman Alexander Afanasyev.
"Our success in many way determines the success of the development of the Russian market."
Moscow Exchange chairman Sergei Shevtsov added that the company was "strongly positioned to develop as a major global trading venue across multiple asset classes," Shevtsov said in a statement.
But the market capitalisation is less than the $4.5 billion valuation the merged company earned two years ago.
The dip reflects the hardships Russian stocks have suffered since Western investors grew more fearful of emerging market risk after the global economic crisis.
But analysts also said the IPO stock was too expensive compared to with its Western counterparts.
"This is primarily a risk diversification play," said Investcafe independent consultancy analyst Yekaterina Kondrashova.
"But the exchange's development prospects over the coming two or three years are vague," the analyst said. "There is no guarantee that future Russian flotations will be conducted in Moscow as the government wishes."
The authorities had hoped that a successful IPO would help encourage others to forgo financial capitals such as Hong Kong or London and list in Moscow.
Putin had initially set the goal of turning Moscow into a global financial centre rivalling London and New York during his first spell as Kremlin chief in 2000-2008.
But Friday's results may force the authorities to rethink their strategy even though the the float was two times oversubscribed.
Russian media and analysts said much of the investor volume came from state corporations such as the Russian Direct Investment Fund -- a $10-billion entity established in 2011 to help draw foreign direct investments to Moscow.
The Fund's director told Interfax that it had invested $80 million while drawing an additional $200 million to the operation.
The Vedomosti business daily reported that most interest in the new Russian stock came from Western investors.
A source at the Moscow Exchange said "a small amount of Russian retail demand" contributed to the offering.