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LONDON/MOSCOW (Reuters) - En+ Group, which manages Russian tycoon Oleg Deripaska's aluminum and hydro power businesses, plans to raise $2 billion in an initial public offering (IPO) in London and Moscow, sources familiar with the deal said.
A flotation of 20 to 25 pct of En+ split between the two capitals would value the company at up to $10 billion, a valuation some industry sources have said is too ambitious.
"You have a tough valuation in market conditions which could still be tricky and a shareholder who does not have a capital markets track record," one of the sources said. "If you compare it to other conglomerates like Sistema (AFKS.MM) who have a mishmash of assets, it's a high valuation."
En+ declined to comment.
En+ owns assets in metals, energy and coal, including a 48 percent stake in Rusal (0486.HK), a Hong Kong-listed Russian aluminum producer, which is a big consumer of hydroelectricity produced by En+'s power companies.
Sistema's businesses include stakes in mobile telecoms network operator MTS (MBT.N), a toy retailer and agriculture assets.
Another source said some investors wanted En+ to apply a discount to the sum of its assets, which is common in valuating a holding company. However, En+ does not see itself as a holding company, the source said.
It reported 2016 adjusted core earnings of $2.3 billion this month, in its first public disclosure of financial results in two years.
A source who attended meetings between En+ management and analysts from the organizers of the listing told Reuters the listing, aimed at reducing the company's debt, was expected to take place in late June, depending on market conditions.
But it could be delayed until after the summer, or postponed indefinitely if market valuations miss expectations, the source said. The company hopes to attract anchor investors, with a focus on long-term investors, for half of the placement.
U.S. banks Citi and JP Morgan along with Russia's Sberbank CIB and VTB Capital are among arrangers of the IPO, sources told Reuters in February.
En+'s debut on the London Stock Exchange could mark the return of Russian listings in the capital, after a slump in commodity prices and Western sanctions brought most deal-making to a standstill.
The country's biggest gold producer Polyus (PLZL.MM) is also considering a secondary share offering in London.
But the LSE faces stiff competition from Moscow's main exchange, which claims to have access to the world's biggest investors.
Russia's biggest IPO so far this year, children's retail chain Detsky Mir (DSKY.MM), shunned the London market and opted for a Moscow IPO, attracting a significant proportion of international investors including Columbia Threadneedle Investments and Deutsche Asset Management Investment.
Reporting by Dasha Afanasieva, Olga Popova and Polina Devitt; Writing by Dasha Afanasieva; Editing by Susan Thomas