OAO Russian Machines, a Moscow- based manufacturer controlled by billionaire Oleg Deripaska, will seek as much as $3 billion by selling a minority stake in overseas markets, said Chairman Siegfried Wolf.
The company plans to sell as much as 25 percent in an initial public offering outside of Russia, Wolf said in an interview at Bloomberg’s headquarters in New York yesterday. Russian Machines will probably sell stakes in its individual units, rather than the whole company, he said.
“We’re absolutely in shape to do it this year or next,” Wolf said. “We would look for international investors and roll out a stake which is not a big one but which demonstrates what we are capable of doing. I’m quite sure we will start with a small spinoff and move bigger if the market honors what I am expecting.”
Wolf, who was appointed as head of Russian Machines by Deripaska in 2010, presides over a company made up of 26 units including vehicle building plants, construction firms and aircraft and military machinery producers. The IPO would follow the $2.1 billion Hong Kong share sale in January 2010 by United Co. Rusal Ltd. (486), the world’s largest aluminum producer. Deripaska is chief executive officer of Rusal and his En+ Group Ltd. is the biggest shareholder.
Russian Machines will probably wait until a legal dispute involving its Dutch unit is resolved before going forward with any IPO, Wolf, 55, said. The unit failed to honor an $87 million guarantee on a $878 million loan used by Deripaska to buy a stake in Magna International Inc. in 2007, lawyers for French bank BNP Paribas SA said in a London court on Nov. 7.
“We are willing to go in a very public way through the court system,” he said yesterday. “I have no pressure to speed up the process” of a share offering, he said.
The first unit to conduct an IPO will probably be Russian Machines’ railway company RCTM Group, said Wolf, who left the co-CEO position at Magna (MG), an Aurora, Ontario-based car-parts maker, to take up the helm of Russian Machines.
“We are absolutely looking outside of Russia” to do the listing, said Wolf, adding that London, Hong Kong, the U.S. or Canada are all possible locations. “You sometimes can lose money, but you can never lose your reputation.”
Deripaska, 44, has a fortune Forbes estimated at $16.8 billion in 2011. The native of Dzerzhinsk, a small town in Russia’s Nizhny Novogorod region, owns EuroSibEnergo Plc, the country’s largest non-government power producer, according to En+ Group’s website. Rusal also holds 25 percent of OAO Norilsk Nickel, the world’s biggest nickel and palladium producer.
Units of Russian Machines, which include the Nizhny Novogorod-based automaker OAO Gaz, employ more than 75,000 people in 14 regions throughout Russia, according to the Russian Machines website.
“Investor interest is going to be huge” in a Russian Machines IPO, Luis Saenz, chief executive officer of the U.S. unit of Moscow-based brokerage Otkritie Financial Corp., said by phone yesterday. “This will be positive for the overall market.”
Moscow’s 30-stock Micex Index (INDEXCF) has lost 16 percent in the past 12 months, compared with a 12 percent drop for the MSCI Emerging Markets Index. (MXEF) The Micex trades for 5.4 times estimated earnings for member companies, compared with 10 times for both Brazil’s Bovespa Index (IBOV) and China’s Shanghai Composite Index.
The 30-day average value traded in shares of 10 of Russia’s biggest companies in London was $1.2 billion on April 16, 60 percent higher than for Russia’s Micex-RTS Exchange, data compiled by Bloomberg show. The only IPO conducted by a Russia- based company this year -- the $250 million offering by oil and gas producer RusPetro Plc (RPO) -- was undertaken in the British capital.
Moscow-based Rusal, which used the proceeds of its share sale to pay down debt, fell 0.2 percent to HK$5.68 as of 10:13 a.m. in Hong Kong today. Rusal is trading 47 percent below its listing price of HK$10.80.
En+ Group, which holds 47 percent of Rusal, is considering seeking an Asian IPO within three years, Chief Executive Officer Artem Volynets said in an interview in St. Petersburg in June last year. Rusal was the first Russian company to list in Hong Kong.
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