By Irina Filatova
United Company RusAl raised 17.4 billion Hong Kong dollars ($2.24 billion) in its initial public offering in Hong Kong, giving the firm a valuation bigger than that of competitor Alcoa.
The company offered its shares at a price of 10.8 Hong Kong dollars ($1.39), in the middle of the price range that RusAl announced in its IPO prospectus in late December, Bloomberg reported, citing three sources close to the deal. RusAl said in the prospectus that it would place 1.61 billion new shares, or about 10.81 percent of its equity capital.
The sale values the company at $21.05 billion, higher than its main rival, U.S.-based Alcoa, which has a market capitalization of about $16 billion.
Such a valuation lands in the middle of the $18.7 billion to $24.7 billion price range estimated by four banks participating in the deal.
In December, RusAl shareholder Mikhail Prokhorov exchanged $1.82 billion of the company’s debt for a 6 percent stake. Under the current valuation, such a stake is worth $1.2 billion. The IPO brings former majority owner Oleg Deripaska’s stake to 47.59 percent.
The banks organizing the IPO valued RusAl at 11.7 times 2010 earnings before interest, taxes, depreciation and amortization, sources told Bloomberg. Aluminum Corporation of China, or Chalco, trades at 14 times its 2010 EBITDA, while Alcoa is valued at 7.7 times EBITDA.
A RusAl spokeswoman declined to comment Friday.
“It’s a balanced price, and it could be considered adequate for the market, taking into account the increase of aluminum prices,” said Maxim Semenovykh, a metals analyst at Alfa Bank.
Aluminum prices rose steadily last year, from a low of $1,288 per ton in February to $2,230 on Dec. 31. The metal finished trading Friday in London at $2,231 per ton.
The IPO has attracted upward of 300 investors. Among the four cornerstone investors, which together planned to purchase about 39 percent of the offer, are NR Investments, U.S. hedge fund Paulson & Co., and three of Malaysian billionaire Robert Kuok’s companies. State-owned Vneshekonombank also planned to buy 3.15 percent.
The successful listing in Hong Kong could encourage other Russian firms to follow suit, analysts said.
“RusAl’s IPO shows that there’s interest in Russian companies trading in Hong Kong not only from Asian investors but also from U.S. and European investors,” Semenovykh said.
The company will use the funds raised in Hong Kong to make a dent in its $14.9 billion debt, including $7.4 billion owed to foreign banks and $4.5 billion to Vneshekonombank.
RusAl’s shares are expected to start trading in Hong Kong on Thursday.
• A unit of Credit Suisse Group, co-manager of RusAl’s IPO, has urged investors to shun the aluminum company over pollution concerns at Lake Baikal, Bloomberg reported. Clariden Leu’s emerging markets funds struck RusAl from their investment lists and canceled plans to buy shares after Deripaska’s pulp factory on the lake was allowed to reopen. The bank told clients considering RusAl shares to “take into account the business practices of its majority owner,” said Zina Psiola, who manages more than $200 million at Clariden.
RusAl spokeswoman Vera Kurochkina declined comment.
The Moscow Times
