Rosneft is getting a hard time from institutional investors. They’re grumbling that the Russian oil giant is demanding too much for its shares.

So why doesn’t Rosneft just cut them out of the deal?

After all, the shares are also being offered to strategic investors — such as BP, Shell and oil companies from China and Malaysia — and domestic investors. There is already enough demand from these two groups to cover most of the $10 billion of stock on offer.

What’s more, strategic investors seem less fussed about the price. They aren’t looking at the deal through purely financial eyes. So why not ignore institutions and sell the lot to these investors at top whack?

The snag is that Rosneft needs the institutional investors. Some of the strategic investors who have indicated interest may not buy. And the float is meant to give the oil giant legitimacy, especially in the wake of the controversial Yukos affair.

It needs a liquid stock, both to give Rosneft an acquisition currency and to provide its new shareholders with an exit. A stock priced purely off demand from top-dollar-paying strategic investors would most likely fall in the aftermarket — until it reached the point at which institutions would come in.

Meanwhile, potential investors will hope the glare of market scrutiny will act as a stick to improve transparency and accountability.

Finally, the Russian government wants the prestige attached to a successful stock-market listing, backed by the world’s biggest investing institutions. If that means taking a haircut, it may consider that a price worth paying.