SHARES in Gazprom, the Russian energy company in which the Kremlin owns a 51 per cent stake, have soared 17 per cent in the past three days after Western investors were given the green light to purchase as much as 29 per cent of the business.

From this week foreign investors can trade in Gazprom’s locally listed shares, giving them access to 49 per cent of the company, after President Putin finally unveiled his long-awaited liberalisation of Gazprom’s equity structure. Previously, foreign investors could have legally traded only in the small amount of Gazprom shares listed abroad. Braver investors could have bought and sold locally listed shares through “grey trading schemes”, but big Western investors steered clear of these.

At a stroke, the liberalisation of Gazprom’s equity has created the biggest and most liquid stock in emerging market indices, meaning that billions of dollars from index-tracking institutional investors will now flow into the company. The stock rose 160 per cent last year in anticipation of the move, and has risen a further 17 per cent this week.

Bob Foresman, head of investment banking at Dresdner Kleinwort Wasserstein in Moscow, said: “It’s no surprise (that) foreign investors find the stock so attractive. It’s the biggest hydrocarbon company in the world and, as of this week, foreign investors can finally get proper exposure to it.”

Gazprom has 25 per cent of the world’s gas reserves and is a growing presence in the oil markets. It provides more than 25 per cent of the European Union’s gas requirements. While its part in the Ukraine gas crisis did not endear it to Western politicians and gas consumers, foreign shareholders in the company see the outcome as a success for shareholder value. Bill Browder, head of Hermitage Capital, said: “Now that Gazprom has stopped subsidising Ukraine, it will make several billion dollars more each year.”

Western governments have criticised Gazprom for being a political tool of the Kremlin, but many foreign investors like the fact that the company enjoys strong state support.

“It means it won’t be subject to a Yukos-style attack by the State. That makes investors more comfortable,” Mr Foresman said.

SET TO FLOAT IN LONDON

• Rosneft, the state oil company, which took over Yukos’s main asset, is scheduled to float this year. Expected to be Europe’s biggest float for years
• Vneshtorgbank, the state-owned retail bank, and Gazprombank, the banking arm of Gazprom, are set to float in Britain. Around 30 other Russian companies are planning foreign listings this year

  Attractions of Kremlin control

  MANY Western investors have taken the view that if the Kremlin holds a controlling stake in a Russian company, then that firm is likely to benefit from better business deals, Kremlin-orchestrated takeovers and may be protected from the threat of bankruptcy and state harassment.

  While state firms have taken over oligarch-controlled companies such as Yukos and Sibneft, the Kremlin has opened up some businesses for privatisation so that foreign investors can take minority stakes.

  Roland Nash, chief strategist at Renaissance Capital, said: “Russia has become a lot more stable over the last six years under Putin and the stock market has been doing phenomenally well.”

  Last year the Russian RTS index was up nearly 100 per cent, making it one of the best-performing markets in the world. That is partly due to Russia’s large reserves of natural resources and record global commodities prices.

  Under Mr Putin the state’s presence in strategic sectors such as energy and banking has grown. Foreign investors are going to get exposure to a range of state companies this year, through IPOs scheduled to take place in London.