ST. PETERSBURG -- A local bread factory has successfully auctioned off new shares in an experimental public offer, despite low interest among the individual investors that the project was designed to attract.


"We are very satisfied with the results of this public offer," said Alexei Dimchenko, deputy director of economics of the Khlebny Dom ("Bread House") bread factory. All of the 13.8 million shares were distributed during the three-week public offer in September.


While the new issue was geared toward small-time investors, however, only 9 percent of the shares wound up in the hands of private buyers.


Three of the city's large banks -- Bank Petrovsky, Credit Petersburg and the St. Petersburg Industry and Construction Bank (Promstroibank) -- purchased 72 percent of the shares as underwriters. Investment firms garnered 15 percent, while brokerage firms gained the remaining 4 percent.


Project officials said the results came as no surprise. "We really didn't expect a huge flood of individuals," Dimchenko said. "They are still not prepared to enter the market." He blamed the lack of interest on the general air of distrust and fear that has chased small-time investors away from the financial market following the torrent of investment fraud schemes during the past several years.


Created under the auspices of the British Know-How Fund, the public offer project has been a year in the making. Experts from the Kleinwort Benson merchant bank, KPMG consultants and lawyers from Linklaters & Paines scoured the city in search of promising companies with solid business plans that would appeal to small investors.


A similar project was conducted last November with the Moscow-based Red October candy factory.


"In an ideal world, we would have liked to see more (private investors) participate," said Mark Lethbridge, a director of Kleinwort Benson. "But this was in line with our market research of the region."


"There's a lot of education that needs to be done in order for the retail market to take off to the next level," he added.Khlebny Dom, whose leadership has taken great pains to upgrade its image from its former existence as the Moskovsky District Bakery, was tapped for the program because of its basic product and a simple plan for investment and future growth. With the 15.5 billion rubles ($3.7 million) raised, the company plans to replace four of its six outdated ovens.


The factory has already purchased one new oven from the German company Winkler prior to the new issue. Negotiations for a second oven are underway with Winkler and an Italian firm. Dimchenko said he expected the new contract to be signed by Nov. 1.


With the shares issued, Dimchenko said, the company expects private investors to show more interest. "We believe that individuals will come to us through the secondary market," he said. "People just need to begin to trust us."