International Finance: After Rusal Listing, Hong Kong Beckons - Executive at Aluminum Producer Cites Proximity and Valuations as Virtues of Offerings in Asian Hub
|
 |
 19.03.2010 |
The Hong Kong listing of Russian aluminum producer UC Rusal Ltd. opens up a compelling option for Russian companies that have traditionally sought to go public in London, Rusal's deputy chief executive said.
"Every Russian company looking at the equity markets now has a choice, where before they only had London," Artem Volynets said in an interview Thursday. Seeking a Hong Kong listing, he added, "is a no-brainer decision" for Russian resource and raw-materials companies, pointing to Hong Kong's deep liquidity, its proximity to China's economic growth and the promise of richer valuations.
Mr. Volynets also touched on Rusal's efforts to pare down its $12.9 billion debt load. He said Rusal was considering ways to refinance the $3.3 billion portion of the debt that is due by the end of 2013. One tentative idea is to issue convertible bonds, though Mr. Volynets said little work has been done on that front. Rusal used $2.1 billion of the proceeds from its Hong Kong initial public offering to pay down debt.
The path to Rusal's Hong Kong listing was far from smooth. The company's approval hearings were held up by concerns over the heavy debt obligations, as well as corporate-governance questions surrounding Chairman and Chief Executive Oleg Deripaska.
After several false starts, securities regulators signed off on the listing but barred individual investors from subscribing to the deal.
Rusal's stock has faltered since it was floated on Jan. 27 at 10.08 Hong Kong dollars (US$1.30) per share. On the first day of trading, shares fell 11% and are now down almost 14% since going public. Rusal shares closed down 0.3% at HK$8.69 Thursday.
Mr. Volynets attributed the share-price weakness to market disappointment at recent earnings figures from Rusal's rivals, as well as concern about China's efforts to slow down economic growth. He conceded that Rusal's trading volumes had been underwhelming but said investors will have a fresh look after Rusal announces results in the coming weeks.
Despite the company's rocky path to listing in Hong Kong, Mr. Volynets said he was fielding calls from some of Rusal's peers, looking to follow the company's lead. He said the Rusal listing was particularly challenging because the company was working on a tight timetable, and because it was the first Russian company to list in Hong Kong.
"The first company will always have to go through more [trouble]," Mr. Volynets said. "London would have been easy for us, because many have listed from our territory there." With Rusal's Hong Kong listing complete, he said, future listings would likely face a less troublesome regulatory vetting.
Stock-exchange operator Hong Kong Exchanges & Clearing Ltd. has been eager to attract listings beyond its traditional base of Hong Kong and mainland Chinese companies. It has sent its own executives to a number of developing countries, including Vietnam and states of the former Soviet Union. Rusal is one of its highest-profile catches yet.
The Wall Street Journal
<< previousnext >>
back to the news archive
|
