RUSAL launches float in HK
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UC RUSAL has raised US$2.2 billion in a Hong Kong share float that will let the world's largest aluminum producer repay some of its US$14.9 billion debt and may spur other Russian firms to pursue Asian listings.
Asia's richest man was among the investors to bet on RUSAL's ability to flourish on growing Chinese demand for aluminum via a long-awaited IPO that will see RUSAL's billionaire owner, Oleg Deripaska, surrender majority ownership of the company.
The IPO, also heavily backed by Russian state banks, was priced in the middle of its range, three sources close to the offering told Reuters. This values RUSAL at a 15 percent premium to Hong Kong-traded peer, Aluminum Corp of China Ltd, also known as Chalco.
"That they were able to get this done at all is testament to the strength of the Russian treasury," said Kim Iskyan, director of consultant Eurasia Group. "From the get-go, they pre-sold about 40 percent between the Russian government and friends of the Russian government."
RUSAL, which will become the flagship Russian stock in Hong Kong when trading launches on Wednesday, overcame heavy scrutiny to win approval from the bourse. Retail investors who usually swarm to Hong Kong listings were excluded as a precaution.
RUSAL spent much of last year in talks to secure Russia's biggest ever debt restructuring deal and said in its 1,141-page IPO prospectus that future performance depends on the strength of aluminum prices, which have rebounded 80 percent since February 2009.
The company sold 1.61 billion new shares, or just under 11 percent of its enlarged share capital, at HK$10.80 each, the sources said. The indicated price range was HK$9.10 to HK$12.50. The pricing values RUSAL at 11.7 times its expected 2010 earnings before interest, taxation, depreciation and amortization. Chalco trades at a 10.2 times multiple and US firm Alcoa Inc at 7.6 times.
The IPO attracted more than 300 institutional investors, one source said. Heavyweight backers included Cheung Kong Holdings,
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