Rusal’s Hong Kong IPO Said to Be Fully Subscribed (Update1)

Jan. 15 (Bloomberg) -- United Co. Rusal, seeking to raise as much as HK$20.1 billion ($2.6 billion) selling shares in Hong Kong, won pledges from investors equal to all the stock it’s offering, said two people familiar with the matter. The initial public offer is fully subscribed within Rusal’s price range of HK$9.10 to HK$12.50 a share, said the people, who declined to be identified because the discussions with investors are private. Moscow-based Rusal has completed marketing the IPO in Asia and plans to continue meeting investors in Europe this week, the people said. Hong Kong billionaire Li Ka-shing this week joined Malaysian tycoon Robert Kuok and Nathaniel Rothschild in backing the share sale as Rusal seeks to be the first Russian company to list in the city. Retail investors were barred from the IPO, which was delayed by regulators at least twice on concern about the aluminum producer’s $14.9 billion of debt. “Big name investors subscribing has definitely helped,” said Francis Lun, general manager of Fulbright Securities Ltd. in Hong Kong. “If you’ve got people like Li Ka-shing investing it gives the offer more credibility.” Rothschild’s private investment company, New York hedge- fund manager Paulson & Co., Russian state-owned development bank Vnesheconombank, and Kuok and companies in the Kuok Group are among investors that agreed to buy the shares as so-called cornerstones. They are guaranteed shares in return for a pledge not to sell them for six months after Rusal starts trading. Hong Kong-based Cheung Kong (Holdings) Ltd., controlled by 81-year-old Li, will buy $100 million worth of Rusal shares that won’t have a lock-up period. Rusal is the world’s largest aluminum producer. Norilsk Stake Vera Kurochkina, a Rusal spokeswoman, declined to comment. Rusal plans to reduce its debt with the IPO’s proceeds. Its borrowings almost doubled after the company bought a quarter of OAO GMK Norilsk Nickel before commodity prices collapsed in 2008. “There is still a misconception that Rusal is in financial difficulty,” Artem Volynets, Rusal’s deputy chief executive officer, corporate strategy, said in Hong Kong on Jan. 11. “It is not. The company is in a stable financial position. We’ve reduced our costs, aluminum prices have risen and we have restructured our debt.” Rusal, controlled by billionaire Oleg Deripaska, posted a net loss of $868 million in the first half of 2009, compared with net income of $1.4 billion a year earlier. Profit won’t be less than $434 million for 2009, it said in its IPO prospectus. The company intends to have its depositary receipts trade in Paris.