MOSCOW (Oct 5): Russia's En+ Group will launch an initial public share offering in London and Moscow, it said on Thursday, testing investors' appetite for Russian assets three years after Western countries imposed sanctions on Moscow over its role in the Ukraine crisis.
The listing of En+, which manages Russian tycoon Oleg Deripaska's aluminium and hydropower businesses, will be the first major IPO of a Russian company in London since 2014, when Russia annexed Ukraine's Crimea region.
It will provide a boost to London's IPO pipeline, which has slowed following Britain's vote to leave the European Union.
En+ aims for the sale of new and existing shares to fetch US$1.5 billion, of which US$1 billion is expected to be new capital, it said in a statement on Thursday.
The London listing is expected to take place in November, and En+ plans to use the proceeds from the offering to repay a portion of its debt.
En+ owns assets in metals and energy, including a 48% stake in Hong Kong-listed Russian aluminium producer Rusal, which is a big consumer of hydroelectricity produced by companies owned by En+.
"We are pioneering the renewable energy and clean metals model, and a successful IPO would deleverage the group and provide an opportunity to enhance our platform," Maxim Sokov, En+ chief executive, said in the statement.
En+ is offering its shares three months after Russia's largest gold producer, Polyus raised more than US$800 million in a secondary public offering in London and Moscow.
The London Stock Exchange was the international listing venue of choice for Russian companies between 2005 and 2014 when they raised tens of billions of dollars there.
However, Russian listings largely dried up after Russia annexed Crimea and backed separatists in eastern Ukraine, prompting the Western sanctions.
Russian executives blamed, among other factors, a combination of weak interest in Russian assets from London investors and a Kremlin-inspired drive for Russian business to be more self-sufficient.
Deripaska, the owner of En+, is ranked Russia's 23rd richest man, worth US$5.1 billion, according to Forbes magazine.
The industrial assets that form the core of his fortune were acquired during the chaotic sell-off of state assets in the 1990s, following the collapse of the Soviet Union. Deripaska later waged battles with rivals, including businessman Michael Cherney, to maintain control over his businesses.
In 2010 Rusal undertook an IPO in Hong Kong and Paris, a deal that demonstrated the growing stature of Russian companies on the international stage and Deripaska's interest in China, the world's top consumer of aluminium.
Ahead of the EN+ offering, Singapore's AnAn Group, a strategic partner of China's CEFC, agreed to purchase global depository receipts (GDRs) during the IPO for US$500 million, En+ said in its statement.
The IPO comes as prices for aluminium, mainly used in transport and packaging, have risen 27% on the London Metal Exchange so far this year.
Rusal's share price is up 87% since the start of 2017, and En+'s 48% stake in the company currently has a market value of US$5.8 billion, according to Reuters data.
As of May En+ had around US$5 billion of net debt, amassed during the last decade when it was consolidating power assets in Siberia.
En+'s first-half revenues rose 23% from a year ago to US$5.8 billion due to higher aluminium prices, while its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) rose 44% to US$1.5 billion, it said in the statement.
It said it would at least twice a year pay dividends equal to the sum of dividends received from Rusal and 75% of the free cash flow of En+ Power, subject to a minimum of US$250 million per year.