United Company RusAl has lined up four cornerstone investors for its upcoming IPO in Hong Kong, including a member of the Rothschild family and one of the richest men in Southeast Asia, according to a prospectus for the sale.
The highly anticipated listing will be the first by a Russian company in Hong Kong, and analysts said it was gaining steam after a series of setbacks prevented the sale from being completed in December.
The aluminum giant, controlled by Oleg Deripaska, is hoping to sell a stake of 10.81 percent to pay down $14.9 billion in debt.
The billionaire will see his stake of 53.35 percent diluted to 47.59 percent after the IPO, but he will retain control over management, according to the prospectus.
Among the four cornerstone investors is NR Investments, owned by Nathaniel Rothschild, which has set aside the equivalent of $100 million to buy shares, RusAl said in its 1,141-page prospectus, released Dec. 31 on the web site of the Hong Kong Stock Exchange.
U.S. hedge fund Paulson & Co., run by billionaire John Paulson, also agreed to invest $100 million, while three of Asian billionaire Robert Kuok’s companies — Kerry Trading Co. Limited, Cloud Nine Limited and Twin Turbo Limited — will pay a combined $20 million.
Vneshekonombank will buy 3.15 percent at the offer price, the document said. VEB head Vladimir Dmitriyev said in December that the lender could spend up to $670 million on the shares.
If the shares sell at the midpoint price of 10.8 Hong Kong dollars ($1.39), the four cornerstones would be buying about 39 percent of the offer for 6.8 billion Hong Kong dollars ($877 million), the document said. At that price, NR Investments and Paulson & Co. would take 0.49 percent stakes, while Kuok’s companies would get 0.09 percent.
RusAl has set a range of 9.10 Hong Kong dollars to 12.5 Hong Kong dollars ($1.17 to $1.61) per share.
Analysts said there was reason to believe that the IPO would be successful.
“The attitude of investors and analysts toward this IPO has changed significantly. RusAl’s owners have managed to find investors who believe in the recovery of the world economy and who are ready to invest for a long time,” said Nikolai Sosnovsky, an analyst at UralSib.
The issue was delayed by protracted debt restructuring talks, which concluded late last month, and was barred by regulators from selling to individual investors.
RusAl said in the prospectus that it had $14.9 billion in debt after the restructuring, including $7.4 billion to foreign banks and $4.5 billion to VEB. Sberbank has agreed to refinance the debt to VEB, extending the repayment to 2013.
RusAl hopes to “reduce its debt levels sufficiently” by December 2013, the company said in the prospectus. It also expects to see a net profit of $434 million in 2009, the document said.
Aluminum prices rose steadily last year, from a low of $1,288 per ton in February to more than $2,200 by the year’s end. But the company warned that it remained sensitive to changes of the aluminum prices as well as the currency exchange rate.
RusAl plans to determine its expected price on Jan. 22 and announce an expected offer price on Jan. 25, the prospectus said. The shares are expected to begin trading on the exchange on Jan. 27.
Four of the 16 banks participating in the IPO on Dec. 29 valued the company in an average price range of $18.7 billion to $24.7 billion, Reuters reported. The Bank of China, one of the organizers, said RusAl could be worth $21.1 billion to $26.7 billion, depending on aluminum prices, Reuters said.
“We think that the lower bound of $16 billion is more or less reasonable,” UralSib’s Sosnovsky said.
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