The Moscow Exchange staged a disappointing flotation on its own share trading platform on Friday that valued Russia's main bourse at $4.2 billion well below its own valuation 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 had been set at 55 rubles, the lowest end of an announced range of 55-63 rubles ($1.84-$2.10 / 1.34-1.55 euros) per share after a high-profile 10-day roadshow in Moscow and abroad.
A good result would have valued the company at $4.6 billion (3.4 billion euros).
Trading opened Friday afternoon under the MOEX ticker and initially saw the stock price slip to 54.70 rubles. It clawed back its losses after 90 minutes of trading.
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.
"Today's announcement marks an important moment for Moscow Exchange and for the Russian capital markets," said its chairman Sergei Shevtsov.
"Having successfully placed 15 billion rubles ($500 million), the Moscow Exchange is 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 warn that the exchange's suggested price-to-earnings ratio of around 15 made it too expensive compared with its Western counterparts.
The authorities had hoped that a successful IPO would help encourage others to forego 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 between two and three 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 helping bring an additional $200 million to the operation.
The Vedomosti business daily reported that most interest in the new Russian stock came from Western investors.
Other reports said that there was little interest from individual Russian investors who were also eligible to take part.