NEW YORK (CNNMoney.com) -- After mounting one of the largest initial public offerings in history, Russian state-owned firm Rosneft's first day of trading on the London Stock Exchange should have been a thriller.

It wasn't. The stock couldn't shake a shadowed history and stayed flat.

Nevertheless, the oil and gas company raised a whopping $10.4 billion when it priced its shares last week, making it the sixth-largest IPO on record, according to deal tracker Dealogic.

Institutional investors were notably absent from the offering, steering clear of the storm of controversy the deal has unleashed, while so-called strategic investors lined up to buy shares.

At issue is the contested ownership of the Rosneft's assets, which many say were illegally seized from former Russian oil giant Yukos after its owner, Mikhail Khodorkovsky, riled the Kremlin.

Robert Amsterdam, the international defense attorney for Khodorkovsky and a highly vocal critic of the Rosneft IPO, said it isn't just ethical considerations that kept investors away from the offering.

"It's a bad deal; there's a massive question to the ownership of assets, and Yukos has promised a lifetime of litigation," he said.

But with crude prices scaling fresh record highs, it may be difficult for investors to pass up shares of the firm.

John Connor, who manages the $125 million Third Millennium Russia Fund (Charts), said he didn't participate in the initial offering, when institutional investors have an opportunity to buy shares before they are available to the public, largely because the price was too high.

But he said with the oil and gas sector booming, he couldn't miss out on the deal and so bought in later.

"Russian IPOs don't always give you the bounce you look for, but I bought in the aftermarket because I think it's something I've got to have," he said.

Rosneft's shares priced at the upper end of their estimated price range, giving the firm a larger market capitalization than Lukoil, Russia's largest oil company.

On their first day of trading in London Wednesday, shares were little changed from their offering price of $7.55 a share.

Nearly one-fourth of the shares in the Rosneft offering were picked up by big oil firms Petronas, BP and China National Petroleum Corporation.

Some analysts said these took up large positions in the offering in an effort to curry favor with the government and have access the country's rich oil reserves.

"There's a lot of politics involved. This is part of the game. It's clear that those who participate will be rewarded by the Kremlin," said Oppenheimer's Fadel Gheit, an oil industry analyst.

Alex Konanykhin, who controlled Russia's largest commercial bank in the 1990s before it was seized by the KGB, said investors should be wary of doing business in Russia.

But the rewards can be great, he noted.

"What will separate those who will make money and those who will lose money is the degree of understanding of the game they are entering. It is a game very different than [the] business most investors know," he said.

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