Russian Aluminum tycoon $1 billion 500 million IPO cited investor differences of opinion
According to Bloomberg news, En+ group's chief executive, said that the Russian billionaire Oleg Deripaska under the name of the metal and energy interests group plans to spend $1 billion 500 million for the initial public offering (IPO), hoping to attract investors with low cost and high power demand margin.
En+ group has Rusal (Rusal) 48% of the shares, after Chinese aluminum prices of large aluminum producers, one of the world's highest efficiency manufacturers, there is a power generation enterprise En + Power's plans to enter the London and Moscow.
CEO Maxim Sokov said, compared with the investors from the Hongkong listed shares of profit, En + can get more profit from Rusal shares, because the group will be able to lower prices En + power energy cost.
Sokov on Tuesday said in an interview: "we seek more demand in the transaction, because En + investors can get more efficient return than the Russian Aluminum Group, En + aluminum output to reduce the cost, because the cost of using the energy will be integrated into the group's revenue.
The company said Rusal's performance was critical to IPO, the largest IPO since 2013. In the first half of this year, Rusal's revenue accounted for 82% of En + revenue, accounting for 65% of profits before interest, taxes, depreciation and amortization. The rest of the proceeds come mainly from En + Power, which is the main asset of hydropower stations in Siberia.
China s AnAn Group will buy $500 million in stock in the form of cornerstone investors. Sokov says En + may attract more buyers later.
According to a bank report revealed by Bloomberg News, VTB Capital, which is launching IPO, is valuing En + 9 billion to nearly $12 billion. According to two people familiar with the matter, En + will seek a valuation of about $8 billion to $9 billion, so the news is unofficial and they require anonymity.
The price range is expected to be announced at the end of next week.
Investors are divided on the issue of new shares.
Alexander Losev, the chief executive of Sputnik Asset Management Co in Moscow, said En + could be "very interesting" with a $9 billion valuation".
Aluminum and energy, he said, were "on the rise" after a long period of decline, and promised dividends were more attractive than bank deposit rates.
Losev also said that China, the world's largest consumer of metals, has become a cornerstone investor and an encouraging signal for potential shareholders.
On the other hand, in the face of the complex structure of En +, investors tend to make simpler choices.
"I don't know why I need to buy En + Union Investment Privatfonds GmbH," the fund manager Ekaterina Iliouchenko said, "if I need to get aluminum. I will buy Russian aluminum, if I want to get cheap hydroelectric power, I will buy RusHydro."
"In emerging markets, investors want to see a simple corporate structure."
According to the VTB report, at the end of the first half of the year, En + had a net debt of more than $13 billion, with a net loan ratio of 4.1 to Ebitda. Perhaps part of the IPO proceeds will be used to reduce these debt data.
"The company's debt burden is worrisome," says Iliouchenko. En + IPO will also face competition from billionaire Mikhail Prokhorov and Viktor Vekselberg for the sale of Rusal's 3% stake.
BCS global market analyst Oleg Petropavlovskiy said investors buying Russian aluminium stocks might avoid buying En + shares. A spokesman for En + declined to comment.