As September approaches, Russian companies are being forced to make a hard decision about going ahead - or pulling the plug – on autumn initial public offerings. And they aren’t the only ones.

While the Kremlin originally planned to privatise 300bn roubles ($10.4bn) worth of assets this year it may be forced to delay planned offerings, such as Sberbank’s, if market volatility brings a drastic discount to valuations.

Though Dmitry Medvedev is said by the FT’s sister paper Vedomosti to have already approved a Sberbank secondary public offering as soon as September, and an initial public offering of shipping giant Sovcomflot before the end of year, the government could put the plans on hold if market conditions stay the way they are currently.

Alexei Ulyukaev, the deputy head of Russia’s central bank - Sberbank’s main shareholder, told Vesti television on Monday that it would be better to wait and sell the planned 7.6 per cent stake in Sberbank in a wider window sometime before 2013 than the force the share sale when market conditions remained tough.

Meanwhile, Dmtiry Peskov, spokesman for Vladimir Putin, told Vedomosti that while it was too soon to say whether the Sberbank sale would be postponed, the government was not going to sell shares at fire-sale prices.

“The privatisation of Sberbank will certainly not happen if it comes at the detriment of the government,” he said.

As Vedomosti notes in the article, it’s hard to imagine the sale going ahead if market conditions remain as they are, given the stark difference between Sberbank’s current share price and the price at which the government was hoping to value the company.

For starters Sberbank’s market capitalisation has fallen 20 per cent since the month. While the Ministry of Economic Development had valued the 7.6 per cent stake it plans to sell  at 150-180bn roubles, the bank’s closing share price on Monday would imply the stake is worth just 129.2bn roubles, according to Vedomosti.

Sberbank’s decision to go through with the listing, or wait, will ultimately depend on how global markets perform – a factor that will be true for any Russian company that tries to tap foreign capital markets this fall.

However, as Chris Weafer, now chief strategist at Troika Dialog, tells beyondbrics, the postponement of Sberbank’s secondary public offering won’t do much to reassure investors about the seriousness of the privatisation programme.

While of course a postponement would be based on factors outside Sberbank’s and the government’s control, it would come a whole two years after the government first announced the list of companies that would be privatised, with many wide-sweeping revisions to the privatisation programme seen in between.

“The government has revised the privatisation programme a number of times over the past couple of years and keeps delaying the start date, with the exception of the VTB [secondary offering in February]. There’s a fair amount of sceptism about the programme and what will actually be done,” Weafer says.

Bankers and investors have been exictedly talking about the Sberbank SPO as one of the most exciting offers of the privatisation programme.

It will be interesting to see what effect its decision to postpone, or go ahead in less-than-ideal conditions, will have on the other offerings that are meant to follow.

The Financial Times