HONG KONG — Shares in United Company RusAl fell heavily on their debut Wednesday as a market slump across Asia and worries over the aluminum group’s debt and legal issues dogged its landmark $2.2 billion Hong Kong IPO.
RusAl’s offering has caught the eye not just for its size but also its importance for Hong Kong’s stock exchange, being the first non-Asian company to have its primary listing there. More Russian companies could follow as the IPO market heats up in 2010.
Attention was also focused on Oleg Deripaska, RusAl’s biggest shareholder and chief executive, who has gone from Russia’s richest man to its most indebted oligarch.
Hit partly by poor timing as concern about China’s tightening monetary policy rippled around Asian markets, RusAl shares fell 9 percent to 9.84 Hong Kong dollars ($1.27), compared with an IPO price of 10.80 Hong Kong dollars ($1.39).
RusAl had overcome heavier-than-normal scrutiny to be allowed to list in Hong Kong. Retail investors who usually swarm to Hong Kong listings were excluded from investing in the IPO before it traded because of RusAl’s debts, litigation and other issues surrounding Deripaska.
Deripaska told reporters in Hong Kong that the stock’s debut was “reasonable.”
“You see what’s happening in the market around the world,” Deripaska said, referring to the broad market sell-off.
Clad in a dark suit and tie and wearing a rose corsage matching the color of RusAl’s logo, Deripaska smiled for the cameras, raising the traditional glass of champagne to toast the start of RusAl trading.
He presented the exchange with a 12-kilogram aluminum Russian doll.
Meanwhile in Paris, where RusAl is listing Global Depositary Receipts, the stock traded at 17.60 euros ($24.77) by midafternoon, down 11.4 percent from an issue price of 19.91 euros ($28.02), as it faced another lukewarm reception from investors.
“It was not on our radar screen. [But] we can’t cover everything,” said Yves Maillot, director of investments at Robeco Gestion.
RusAl was represented in Paris by its chairman, Viktor Vekselberg, a co-owner of the aluminum group SUAL that previously merged with Deripaska’s RusAl.
Vekselberg told reporters that he hoped that Deripaska would stay on at the company despite ceding majority ownership.
“I have known him for 15 years. … He is an excellent CEO, and I would like him to stay for another few years. His replacement is not on the agenda,” he said.
Vekselberg sought to reassure investors about the stability of the company’s position in Guinea — the world’s biggest exporter of bauxite, used to produce aluminum — which is going through a period of political instability following a military coup in 2008.
The outgoing government has said it wanted proceeds from the IPO to clear damages that it claims that it is owed by RusAl, but Vekselberg said the group was in talks to resolve the situation.
“We are in discussions with the new government of Guinea, and I expect a settlement reasonably soon,” he said.
Jackson Wong, an investment manager at Tanrich Securities in Hong Kong, said RusAl’s opening-day drop was not as bad as he had expected, given the company’s complexities.
“It’s not that bad considering the troubles of the firm. The stock is trying to stabilize, but I don’t recommend people buying it. It’s too complicated for an average investor, with the lawsuits and the valuations,” said Wong, who saw some value in buying the stock at 9 Hong Kong dollars.
The IPO sought to help RusAl raise cash as part of its more than $14.9 billion debt restructuring. BNP Paribas and Credit Suisse were joint sponsors and global coordinators.
… we have a small favor to ask. As you may have heard, The Moscow Times, an independent news source for over 30 years, has been unjustly branded as a "foreign agent" by the Russian government. This blatant attempt to silence our voice is a direct assault on the integrity of journalism and the values we hold dear.
We, the journalists of The Moscow Times, refuse to be silenced. Our commitment to providing accurate and unbiased reporting on Russia remains unshaken. But we need your help to continue our critical mission.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and you can be confident that you're making a significant impact every month by supporting open, independent journalism. Thank you.
Remind me later.