Reuters reported that if it happens, it will be one of the largest initial public offerings in the world this year the first from Russia for over a year and a pioneering Russian listing on the Hong Kong Stock Exchange. So it’s no surprise that rumors about RUSAL planning a stock exchange offering this year have attracted lots of attention.
As per report “However, there is a big snag. Without a significant improvement both in RUSAL’s finances and in stock market conditions, the chances of the company actually pulling off such a landmark transaction seem remote.”
The report added that “The IPO story received a major boost this week, when sources close to the transaction leaked details to several media outlets. According to these reports, RUSAL is mulling plans to list 10% of its shares on the Hong Kong Stock Exchange by the end of the year in a deal that would allegedly value the company at some USD 30 billion.”
It also said that “True, the sources have made clear that any IPO would have to await the outcome of debt restructuring talks between RUSAL and its creditors, among them a syndicate of 73 international banks owed USD 7.4 billion. And it’s still far from clear whether it will be possible to wrap these up anytime soon. The deadline for reaching agreement has repeatedly slipped, most recently from September 18th to the end of October and some creditors have not hidden their frustration. But let’s leave these problems on one side for the moment. Even if RUSAL and its creditors do manage to strike a deal in time, the rumored IPO still looks hard to swallow. The main problem is that the USD 30 billion valuation that is being targeted has little relationship with present financial reality.”
Mr Denis Nushtayev an analyst at Moscow’s Metropol brokerage said that “Even with a very optimistic scenario, we value RUSAL at USD 5 billion to USD 6 billion in current market conditions. That could change eventually. As the global economy picks up, aluminium prices may rise and global stock markets should continue their recovery. But it is hard to see any reasons for a fundamental revaluation of RUSAL in the near term. Aluminium prices are presently weakening falling by some 4% in the last week because of significant global oversupply in the industry.”
