Russian oligarch sets stage for IPO No 2

PUBLISHED : Saturday, 22 January, 2011, 12:00am
UPDATED : Saturday, 22 January, 2011, 12:00am

The Hong Kong listing of Russian oligarch Oleg Deripaska's hydropower utility EuroSibEnergo is now back on track after a delay last year.

The flotation of EuroSibEnergo was postponed last year pending approval from Beijing for a joint venture with Shanghai-listed hydropower producer China Yangtze Power to develop hydro and coal-fired power plants in Siberia and Russia's far east.

Regulators also gave the green light for China Yangtze Power to take a stake in the initial public offering as a cornerstone investor.

China Yangtze Power is the nation's largest listed hydropower producer and operates the world's largest hydropower plant in the Three Gorges Dam in Sichuan province.

According to people familiar with the situation, EuroSibEnergo will start pre-marketing its offering next month, after the Lunar New Year, with the aim of raising US$1 billion to US$1.5 billion.

Bank of China International, Deutsche Bank and VTB are joint global co-ordinators of the share sale. Bank of America Merrill Lynch, Credit Suisse, RBS, Renaissance Capital and Sberbank are joint bookrunners.

People with knowledge of the IPO said EuroSibEnergo planned to use the bulk of the proceeds from the share sale to repay a US$1.4 billion loan owed to Sberbank.

Sberbank issued two loans in 2007 and 2008 to finance the acquisitions of power producer Irkutskenergo and a coal business, a VTB Capital research report said.

This will be the second Hong Kong listing led by billionaire Deripaska, the chief executive of the mining, metals and energy group En+.

His first flotation, of the aluminium producer Rusal (which is 47 per cent is owned by EN+), was problematic.

The Securities and Futures Commission ruled that shares in Rusal, which went public last year, could only be traded in blocks worth HK$200,000 or more because of the Russian company's high debt, of about US$14.7 billion.

This effectively barred small investors from trading the stock and its share price initially traded well below the offer price.

In August, the board lot was cut from 24,000 to 6,000, and its share price has since recovered.

Separately, Reuters reported yesterday that China Shouguang Agricultural Product Logistic Park planned to apply to the Hong Kong stock exchange in mid-February for a listing.

China Shouguang is under the control of the family of Xiuli Hawken, chairwoman of Hong Kong-listed Renhe Commercial. China Shouguang mainly provides e-commerce, logistical and value-added services to agricultural producers. The company aims to raise between US$800 million and US$1 billion from an IPO in the second quarter.

Six strategic investors, including Atlantis Investment, Blackstone Group, Capital International and Warburg Pincus, invested US$100 million each for a combined 30 per cent stake in Shouguang at a 2010 price-earnings valuation of 18 times, Reuters said.

A leveraged view

Firms listed by Russian oligarch Oleg Deripaska come with debt

EuroSibEnergo plans to raise up to US$1.5 billion, proceeds that will be used to pay back debt, in US dollars, of: $1.4b

When sister firm Rusal listed in Hong Kong, it came with newly restructured debt, in US dollars, of about: $15b


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