•    HOME   
•    NEWS   
•    BUSINESS   
•    INTERNATIONAL   
•    TECH   
•    SPORTS   
•    LIFE & TIMES   
•    OPINION   
•    MY JAKARTA   
•    BLOGS   

Hong Kong. Rusal’s Hong Kong initial public offering may value the world’s largest aluminum producer 16 percent cheaper than its biggest Chinese competitor.

The price range of 9.10 Hong Kong dollars to 12.50 Hong Kong dollars announced last week would give the Moscow-based company controlled by billionaire Oleg Deripaska an enterprise value of between 10.6 times and 13.3 times its 2010 pretax profit, said people familiar with the deal.

Rusal will be the first Russian company to go public in Hong Kong after the city’s benchmark Hang Seng Index gained 52 percent last year. The metal producer, restricted from selling stock to retail investors, plans to raise as much as 20.1 billion Hong Kong dollars ($2.6 billion) to pare debt of $14.9 billion.

“Projections are always difficult,” said Francis Lun, a Hong Kong-based general manager at Fulbright Securities. “Performance of the shares is what really matters. Since they have no retail investors, I think they will be able to maintain the listing price.”

Banks helping to arrange the IPO estimated Rusal would generate earnings before interest, tax, depreciation and amortization of $2.2 billion this year, said the people, who declined to be identified as the information is private.

The enterprise value, or a company’s stock and debt minus cash, to EBITDA ratio for Aluminum Corporation of China, the country’s largest producer of the metal, is almost 15.9 times. Alcoa, the largest US aluminum producer, trades at 9.3 times, while Rio Tinto, the world’s No. 2 aluminum producer, is valued at 10.2 times.

Rusal posted a net loss of $868 million in the first half of 2009, compared with a net income of $1.4 billion a year earlier. Profit would not be less than $434 million for 2009, it said.

The metal producer is selling 1.61 billion new shares, or a 10.6 percent stake, it said in filings to the Hong Kong stock exchange last week. Rusal may expand its IPO by another 225 million shares to meet additional demand, according to an e-mail sent to institutions on Monday.

Vnesheconombank, the Russian state development bank also known as VEB, NR Investments, the principal investment company of billionaire Nathaniel Rothschild, New York hedge-fund manager Paulson and Company and Malaysian billionaire Robert Kuok have agreed to buy 6.86 billion Hong Kong dollars worth of shares in the IPO.

Rusal’s debt almost doubled after buying a quarter of OAO GMK Norilsk Nickel before commodity prices collapsed.



Bloomberg