Rusal’s IPO Said to Be Approved by Hong Kong Bourse (Update2)

Dec. 18 (Bloomberg) -- United Co. Rusal’s application for a $2 billion initial public offering on Hong Kong’s stock exchange received conditional approval from the bourse, helping to clear the way for it to become the first Russian company listed in the city, said two people familiar with the matter. Moscow-based Rusal plans to start gauging demand for the sale on Jan. 4, the people said, declining to be identified because no announcement has been made. The IPO also needs approval from the Securities and Futures Commission, one of the people said. The SFC proposed to limit the sale to institutional investors, people with knowledge of the matter said today. “The exchange regards the issue as a high-risk investment, but they are under pressure to allow the listing to go ahead,” said Eric Kraus, head of strategy at broker Otkritie Financial Co. in Moscow. Rusal, controlled by billionaire Oleg Deripaska, was thwarted in its bid to go public before the year-end after the bourse sought more information on the company’s debt. Rusal, which is the world’s largest aluminum producer, plans to sell a 10 percent stake to help repay $17 billion of borrowings. Lorraine Chan, a spokeswoman for the exchange, declined to comment. A Rusal spokeswoman, who declined to be identified because of company policy, and SFC spokesman Ernest Kong also declined to comment. Hong Kong’s stock exchange is wooing international companies amid growing regional competition. A successful Hong Kong sale by Rusal may help other Russian companies lure Asian investment, said Renaissance Capital President Ruben Aganbegyan. Debt Restructuring The exchange’s listing committee withheld approval for Rusal’s IPO application at a meeting on Nov. 26 and asked the company for more information, including about its debt restructuring. Earlier this month, Rusal signed an accord with creditors in Russia’s largest corporate debt restructuring. A subsequent review by the exchange, on Dec. 7, again failed to approve Rusal’s bid. The bourse asked the company to explain how it would repay a $4.5 billion loan from Russian state-owned lender Vnesheconombank. The loan will be refinanced by OAO Sberbank, Financial Times reported today, citing unidentified people. Rusal is rushing to secure approval in Hong Kong before the end of the year to avoid redrafting its 1,000-page IPO prospectus, which would delay the share sale until April, the FT also said, citing an unidentified Hong Kong stock exchange official.