Sistema, a diversified Russian conglomerate controlled by billionaire Mr Vladimir Yevtushenkov, yesterday raised $1.35 billion in the country's largest ever initial public offering (IPO).

The London IPO was the biggest test of investor confidence in Russia since the attack on Yukos, once Russia's biggest oil company, which was perceived to be politically motivated.

Investor nervousness about possible further government interference in Russian business has hit sentiment towards Russian stocks.

"We have been saying that the political risks are overestimated in Russia, and the success of this offering would seem to be a sign of that," said Mr Aivaras Abromavicius, a fund manager with Sweden's East Capital.

The sale of 79.6 million global depositary receipts at $17 a share values Sistema at $8.2 billion. It is the largest London IPO since Yell in 2003 and the biggest involving a non-UK company since Orange four years ago. The offer was 2.5 times oversubscribed. Sistema GDRs moved to a small premium in trading yesterday, closing at $17.45.

Sistema was deliberately positioned as a play on Russian consumer sentiment, even though most of its assets are in telecoms via a 51 per cent stake in MTS, Russia's biggest mobile phone company. Sistema's other operations include insurance, real estate and a flagship children's store. - Financial Times Service