Vneshekonombank’s supervisory council has made a decision on whether to participate in United Company RusAl’s upcoming IPO, VEB head Vladimir Dmitriyev said Thursday, but no information on the share listing will be disclosed.
“Any information concerning Vneshekonombank’s participation or nonparticipation in RusAl’s share placement is under embargo,” he said in comments posted on the government’s web site.
RusAl plans to raise capital by placing 10 percent of its shares in an initial public offering on the Hong Kong Stock Exchange. VEB could buy up to 3 percent of the company for 14 billion rubles ($487.6 million) to 18 billion rubles, which would value the company at $16.25 billion to $20.9 billion, a government source told Reuters.
The Hong Kong Stock Exchange delayed considering RusAl’s IPO bid until Nov. 26, which is also a deadline for the company’s debt restructuring, Vedomosti reported Thursday.
RusAl declined to comment Thursday on the company’s IPO.
The $20 billion market valuation implied by the Reuters source is down significantly from the valuation ascribed to the aluminum giant by a recent debt deal. Onexim Group owner Mikhail Prokhorov made a deal earlier this month with RusAl, swapping $2 billion of debt for a 5.2 percent equity stake in the firm, raising his total holding to 19.2 percent.
Vedomosti on Thursday quoted banking sources as saying the average valuation given to the company by participating banks was $20 billion to $26 billion.
“RusAl’s current valuations are overestimated,” said Nikolai Sosnovsky, an analyst at UralSib. “Its IPO will be successful only if RusAl finds major investors who are ready to buy shares having been aware of such valuations in advance,” he said.
VEB is unlikely to consider the possible acquisition of a RusAl stake as an investment, however, Sosnovsky said. Such a purchase would be an act of government support, as RusAl is unlikely to perform well in the near term with so much debt, he said.
RusAl needs the approval of VEB, which became the aluminum company’s largest creditor after refinancing its foreign debt in 2008, before selling any shares. The bank said last month that it would extend the $4.5 billion loan to Oct. 29 next year.
RusAl’s other creditors include VTB, Sberbank and Gazprombank, which are owed a cumulative $2 billion.
“RusAl’s IPO could fail, as the company had chosen the wrong strategy in the Asian market,” said Alexei Kurasov, an analyst at Finam. “RusAl should have carried out a transparent IPO, as investors are hearing many rumors regarding this deal.”
RusAl’s strategy may result in a negative reaction toward other Russian companies that decide to place shares in Hong Kong, Kurasov said.