L, the Russian aluminium producer owned by oligarch Oleg Deripaska, suffered a rough debut on the Hong Kong Stock Exchange yesterday after its $2.2bn (£1.4bn) float.
The company’s shares tumbled 11 per cent to HK$9.66 from their listing price of HK$10.80. Analysts attributed the poor performance to market worries over Rusal’s $14.9bn debt pile and the eight per cent slide in the price of aluminium in Shanghai since the start of January.
Deripaska, the controversial billionaire who is Rusal’s chief executive, was defiant. “Today’s price is reasonable,” he told reporters at the stock exchange. “You have seen what has happened with the financial situation in recent days.”
Rusal twice delayed its initial public offering (IPO) last year, the proceeds of which will go towards paying down its borrowing. This month’s share offering was restricted to institutional and high net worth investors as Chinese authorities were concerned about the extent of the company’s leverage.
The IPO went ahead after Malaysian billionaire Robert Kuok, New York-based hedge fund Paulson, British financier Nathaniel Rothschild and Russian state bank VEB agreed to back nearly 40 per cent of the issue. They are understood to have six-month lock-ins on their holdings. BNP Paribas and Credit Suisse co-sponsored Rusal’s IPO, which officially closed on Monday.
OSK Asia analyst Helen Lau said: “The market sentiment right now isn’t very good. Investors are concerned about its debt risks. If the market outlook for aluminium improves and the potential risks diminish, people would be interested.”
Rusal also listed on the NYSE Euronext market yesterday, becoming the first Russian firm to appear on the Paris exchange since the early 1900s when French investors were burned by Russian railway stocks.
RUSSIAN billionaire Oleg Deripaska was the ninth wealthiest man in the world in 2008, with an estimated fortune of $28bn (£17bn). This has since declined and he is now worth around $3.5bn. He made his fortune as an aluminium tsar in his home country and his largest asset is Rusal, the world’s biggest producer of the metal. He is notoriously shy of media attention, in stark contrast to the more ostentatious oligarchs. He is also a favourite of Vladimir Putin. His background is shrouded in mystery but he is widely believed to be a ruthless political operator. He is the sole owner and head of Basic Element, a diversified investment company established in 1997, with assets in Russia and abroad. Basic Element's main assets are concentrated in six sectors; energy, resources, manufacturing, financial services, construction and aviation. He shot to infamy in the UK after his friendship with Lord Mandelson was exposed. Critics claimed there was a conflict of interest when Mandelson signed off rule changes that benefited the Russian’s company while he was European Trade Commissioner.