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HONG KONG — The much-anticipated public listing of United Company RusAl is expected to price in the top half of its expected range, sources close to the deal said Wednesday.
Several financial market sources said potential investors were being guided to a price between 10.8 and 12 Hong Kong dollars — above the midpoint of RusAl's earlier announced range of 9.1 and 12.5 Hong Kong dollars.
A further source in Hong Kong said the IPO was fully subscribed on the sixth day of bookbuilding. The offer, Hong Kong's first-ever primary share offering by a non-Asian company, is scheduled to close on Thursday.
RusAl won approval to list on the Hong Kong stock exchange late last year after securing a deal to refinance its $16.8 billion debt pile, now reduced to $14.9 billion.
The IPO has been blocked from retail investors because of risks such as future debt repayments and a London court case against the group's controller, industrial magnate Oleg Deripaska, but favorable markets have seen the float garner some appeal in the early weeks of 2010.
Maxim Semenovykh, from Alfa Bank, said the IPO was looking likely to be successful more because of market conditions than anything to do with the RusAl flotation itself.
"The main reason [for the high price range] is the rallying equities and commodities markets. Investors want to jump into a news story. That's why it is so popular. It's a very good time to do an IPO," he said.
The price of aluminum has risen nearly 80 percent in value since trading at a seven-year low in February 2009, mirroring the world's recovery from economic crisis. Still overhanging the sector though is a buildup in global stocks of the metal, used extensively in construction, cars and packaging.
Benchmark three-month aluminum on the London Metal Exchange traded at about $2,280 a metric ton Wednesday, close to 15-month highs hit this month. This is despite the fact that stocks in LME warehouses exceed 4.6 million metric tons, slightly more than RusAl alone produced in 2008.
RusAl is planning to float 10.6 percent of its shares, about 40 percent of which will be bought by Vneshekomombank and other cornerstone investors.
The shares are set to begin trading in Hong Kong on Jan. 27. A secondary placing will take place in Paris.
While full investor coverage of an IPO is a relief for the company and underwriters trying to sell the offering, it is by no means a complete gauge of pre-IPO demand. That will be determined Friday, when the final price is announced.
RusAl, which is aiming to raise up to $2.6 billion from the offering, started taking orders Jan. 12, within its 9.10 to 12.5 Honk Kong dollars per share price range. The bookbuilding is due to end on Jan. 21.
BNP Paribas and Credit Suisse are the joint sponsors and global coordinators of the IPO.
The joint bookrunners are BofA-Merrill, BOCI, Nomura Holdings, Renaissance Capital, and Capital, with Rothschild acting as financial adviser.
