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The State Duma will debate a bill lifting the "ring fence" from around common Gazprom shares to allow foreigners to buy stock on December 9
The State Duma, the lower chamber of the Russian parliament, will debate a bill lifting the "ring fence" from around common Gazprom shares to allow foreigners to buy stock on December 9, a senior parliamentarian said Thursday. Valery Yazev, the chairman of the Duma's energy, transportation and communications committee, said the chamber would consider the bill in both its second and third readings. The Duma approved the bill in the first reading on November 25. This new move will allow foreign entities to buy stock in Gazprom. Up to 49% of Gazprom's common shares will be publicly traded with no ownership restrictions. The government has proposed abolishing several presidential and government resolutions dating back to the 1990s that impose restrictions on the number of stock exchanges trading Gazprom shares, their quota for non-residents and set out procedures for acquiring Gazprom shares for non-residents. The restrictions were designed to prevent a foreign takeover of Gazprom. The proposed legal acts would lift the "ring-fence" around Gazprom shares, allowing foreigners to buy the stock in Russia and abroad. The government will retain its recently acquired majority control of the company. In fact, market estimates suggest that as much as 10% of Gazprom shares are currently owned by foreign entities through "gray schemes" grudgingly tolerated by the government and Gazprom. Share liberalization will result in a huge increase in demand for the company's stock, and Gazprom will become Russia's biggest company by market capitalization. With a current market capitalization of $124 billion, Gazprom is priced much lower that its vast reserves of 114 billion barrels of oil equivalent would suggest. Judging by its international peers, in term of prices and reserves, Gazprom's market capitalization should be in the region of $300 billion.
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