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. Last Updated: 07/27/2016

RusAl Pulls Plans for IPO This Year

ReutersA technician standing at a RusAl plant in Krasnoyarsk. The firm's IPO was expected to be one the biggest this year.
Aluminum giant RusAl has pulled its plans for an IPO this year, sources close to the deal said, Vedomosti reported.

In May, minority shareholder Viktor Vekselberg said RusAl, created in March out of a merger of Oleg Deripaska's Russian Aluminum, Vekselberg's SUAL and Swiss firm Glencore's alumina assets, was looking at a listing in November in London.

RusAl's IPO was expected to be one of the largest listings this year, with analysts predicting that its 25 percent stake would fetch in the upper range of its $5 billion to $10 billion band. Alfa Bank values the company at $36 billion to $38 billion.

The firm, which has hired Morgan Stanley, JPMorgan Chase and Deutsche Bank to manage its listing, did the groundwork over the summer, presenting itself to investors and analysts in London. Earlier this month, analysts were still expecting the listing to take place as planned.

"I anticipated this [postponement] because there has been no news," said Valentina Bogomolova, a metals analyst at Alfa Bank. "If it had been scheduled for November, then in September we would have expected roadshows and meetings with investors."

She now expects the company to list within the next year.

Analysts say flagging aluminum prices, coupled with continuing turmoil on global markets, may be factors in RusAl's decision to delay. RusAl is highly profitable and does not need the cash.

"Given the [current global] volatility, people are very wary of coming to the markets, particularly of not getting the valuations they want," said Mark Butler, senior investment manager at Aberdeen Asset Management.

RusAl is still awaiting approval to list from Britain's Financial Services Authority, Euroweek reported last month. The watchdog said Thursday that it did not comment on individual listings.

The firm is facing legal wrangles with a Tajik company over a state-owned smelter in the Central Asian country, while Deripaska is also fighting a separate claim from Mikhail Chernoi, his former business partner, for a 20 percent stake in Russian Aluminum.

One London-based metals analyst said the RusAl IPO had been on and off for several months now. "It's not market conditions, it's something else," he said, but was unable to elaborate.

As a condition of the merger, Deripaska is understood to have agreed to an exit strategy for the minority shareholders through an IPO. The time frame agreed on among the shareholders is not known, with analysts estimating between two and four years from RusAl's creation, while the company itself has said it will go public within three years.

"In my view, Deripaska is not interested in conducting an IPO at all," said Alexander Yakubov, an analyst at Trust investment bank. "The only people interested in an IPO are the minority shareholders."

Despite repeated calls to RusAl on Thursday, a spokesman could not be reached for comment.

A number of Russian utilities are expected to seek listings later this year, notably OGK-6 and OGK-2. So far, strategic investors have snapped up these companies. If RusAl delays its IPO, it could even be a good thing, freeing up cash for other firms, Yakubov said.

Companies that have indicated their interest in a public listing in 2007 include Metalloinvest, Bank Uralkaly and Bank Zenit. Metals tycoon Vladimir Lisin snapped up a 14 percent stake in Bank Zenit earlier this month.

"Smaller companies are more likely to postpone their IPOs in October and November because the market situation is not so favorable," Yakubov said.