RusAl IPO Seen Likely Moving to Hong Kong

United Company RusAl is considering moving its initial public offering from London to Hong Kong, a senior executive at billionaire Oleg Deripaska's holding company said.

The executive at Basic Element, which owns 66 percent of RusAl, was quoted Wednesday by the Financial Times as saying there was a 95 percent chance of a listing in Hong Kong instead of Britain.

The likely move was prompted by the greater appetite for Russian shares among investors in Hong Kong, London's more stringent listing regulations and an ongoing diplomatic dispute between Moscow and London, the executive said.

RusAl, the world's top primary aluminum producer, considered listing in London toward the end of last year before delaying plans because of a U.S.-led downturn in financial markets, shareholder and chairman Viktor Vekselberg said in November.

Formed in March with the merger of Deripaska's Russian Aluminum, domestic rival SUAL and the alumina assets of Swiss trader Glencore, RusAl said at the time that it would hold an IPO within three years, or by April 2010.

"The company's plans have not changed, we still intend to hold an IPO within three years,'' Vera Kurochkina, a spokeswoman for RusAl, said by phone Wednesday. "The company has not made a decision on the place, date, or volume'' of shares.

Hong Kong is attractive because of its looser listing rules and Deripaska's ownership dispute with former partner Mikhail Chernoi, the Financial Times said, citing the BasEl official.

The report of a possible switch to Hong Kong comes during one of the most tumultuous weeks ever seen on global equity markets.

A spokesman for Hong Kong Exchanges and Clearing said it was the exchange's policy not to comment on individual cases, although its strategic plan includes a goal of attracting listings from new markets.

"[The exchange] will facilitate the listing of issuers from a broader range of jurisdictions than at present and promote this in overseas markets," said Scott Sapp, a spokesman for the exchange.

Some analysts were skeptical about the planned move, however.

"The Hong Kong idea's a phony," said Vladimir Zhukov, an analyst with Lehman Brothers Holdings in Moscow. "They want to spook the London markets regulators and let on as if they're not the only option being considered."

RusAl, the only nonlisted aluminum producer among the industry's top five, sold 40 percent of its products to Western Europe last year and 23 percent to Asia. The company said in November that its agreement to buy 25 percent of Norilsk Nickel, the country's largest mining company, might lead to a full acquisition.

"If you need shares as an acquisition currency, then it's London, not Hong Kong," Zhukov said. "I can't see Norilsk's London or U.S. investors being interested in trading Hong Kong stock."

Alexander Pukhayev, a metals analyst with Deutsche Bank, said the move would make sense because the Hong Kong Stock Exchange was a liquid bourse. He doubted that the company had already decided on the place of the listing, though.

Reuters, Bloomberg, MT