RusAl IPO Planned for Paris and Hong Kong
- By Yulia Fedorinova, Gyuzel Gubeidullina, Kirill Khripunov, Maxim Tovkailo
- Oct. 20 2009 00:00
- Last edited 15:05
United Company RusAl has requested permission to issue shares on Paris's Euronext exchange, where the aluminum giant's initial public offering will be held simultaneously with a listing in Hong Kong.
The company sent the request to French market regulators Tuesday, Le Figaro newspaper reported, and a source close to RusAl's shareholders confirmed the information.
RusAl plans to sell a 10 percent stake simultaneously in Hong Kong and Paris, but it is not yet clear how the stake will be divided, the source told Vedomosti. The company expects to raise about $3 billion to help pay down its debt.
Demand for Russian equities is now particularly high in the East, said Dmitry Kolomytsyn, an analyst at Morgan Stanley. He said he thought that more of the shares would be sold in Hong Kong, while the Paris listing was for the convenience of European and U.S. investors. As a result, RusAl shares will trade 24 hours a day.
When RusAl first began considering an IPO, in 2007, the company set its eyes on the London Stock Exchange, Europe's largest. A spokesperson for RusAl declined to comment on the change of plans.
Controlling shareholder and CEO Oleg Deripaska's decision was influenced by a London court's decision last year to hear a lawsuit filed by former business associate Michael Cherney, also known as Mikhail Chernoi, several of Deripaska's acquaintances said. The Israel-based businessman is seeking $3 billion in compensation from Deripaska for selling him 20 percent of Russian Aluminum, a forerunner to United Company RusAl.
Euronext, Europe's third-largest exchange by volume after London and Frankfurt, isn't a bad option, said Alexei Morozov, an analyst at UBS. It recently merged with the New York Stock Exchange, and now U.S. investors are able to operate there. At the end of 2008, the exchange had 1,110 listings, including ArcelorMittal, Rio Tinto, Vale and Norsk Hydro.
There are still no Russian companies on Euronext. Jersey-registered RusAl would not change that, and it is not planning to launch any trading based on its shares in Russia, two sources close to the company said.
That may not pose a problem, since the Russian market has already gotten used to the fact that steelmaker Evraz Group only trades in London, a source at a major investment bank said.
After Evraz's listing in 2005, the Federal Service for Financial Markets began looking into foreign listings by Russian companies but did not ultimately find a reason to force them to sell at least some of their shares in Russia. The necessary instrument, Russian Depositary Receipts, was created last year, but the service hasn't been able to influence companies to list domestically.
Listing in Hong Kong and Paris is RusAl's right, government spokesman Dmitry Peskov told Vedomosti. "The company is looking for the most favorable conditions for its listing, which is logical given the complicated situation it's in," he said.
Peskov did say, however, that the government would "like to see more cases where the conditions on the Russian market were found to be more favorable."
Spokespeople for the French market regulator and Euronext declined comment.