EN+ to list at lower end of proposed range
Investors say there was caution over corporate governance and links to US scandal
EN+, the hydropower-to-aluminium conglomerate, has priced its London listing at the lower end of a proposed range of values, suggesting that Russia’s first IPO in London since the 2014 invasion of Crimea has struggled to attract high levels of interest from international investors.
The $14 share price, which raises $1bn for En+ at a valuation of $7bn, points to worries about owner Oleg Deripaska’s corporate governance and links to a defendant in a US investigation into Moscow’s role in US president Donald Trump’s election campaign, bankers and fund managers told the Financial Times.
“The valuation is twice what it should be,” said one fund manager who was approached to invest in the deal. “They should have a discount for Russia, they should have a discount for the leverage, and they should absolutely have a discount for corporate governance.”
Monday’s filing of charges against three former aides to Mr Trump — including former campaign manager Paul Manafort, who has longstanding ties to Mr Deripaska — added to investor nervousness over the listing, three of the people said.
The IPO was fully subscribed, with the $14 per global depositary receipt (GDR) price at the bottom of the range of between $14 and $17 issued earlier. EN+ declined to comment.
In addition to the $1bn raised in the London listing, EN+ has an agreement with CEFC China Energy to buy $500m worth of shares. Qatar’s sovereign welfare fund has discussed investing in the free float, while commodity trader Glencore is to convert its shares in aluminium producer Rusal to En+ stock. After the Glencore share exchange, EN+ will own 56.9 per cent of Rusal.
The Rusal stake has also proven a problem for the IPO of En+ as Rusal shares have fallen by more than 17 per cent since the listing was announced in October.
“And people expect a discount on top of that. You’re one step removed from the main asset,” said a fund manager who considered participating in the deal.
En+ is part of Russian tycoon Oleg Deripaska's industrial empire © Bloomberg
Mr Deripaska’s connections to Mr Manafort have become controversial over the past year. The industrialist employed Mr Trump’s former campaign manager a decade ago on a $10m a year retainer for a number of years, and the two men attempted a failed business venture together.
Mr Manafort and his business partner Richard Gates this week pleaded not guilty to charges of illegally laundering $75m of funds through offshore accounts.
“Folks are nervous enough about [Mr] Deripaska and governance as it is,” said one fund manager who has agreed to buy shares in the listing. “You have a bunch of people who would get involved if it comes cheap enough, but may now figure it’s just not worth the headache.”
A spokeswoman for Mr Deripaska said that there was no communication between the two men “during, after, or in the run-up to the 2016 presidential election”, and that the Russian had not communicated with Mr Manafort “for years prior to 2016”.