Tim Wall

Rusal's $2.2 billion IPO in Hong Kong has been welcomed by investors, perhaps with more relief than any other emotion.

Its success lies not, however, in investors' liking for the company, as it was rather a closed affair. Because of worries about the various disclosures required by the Hong Kong Stock Exchange (from the court case by Russian businessman Michael Cherney in London to worries about its large debts) Rusal was barred from marketing the IPO to retail investors.

The institutional and other investors who ended up with stock included several with a clearly vested interest in Rusal, or with strong ties to Rusal CEO Oleg Deripaska.

State bank VEB - a large Rusal creditor - took $660 million, or 30 per cent of the shares on offer, while Libya's Investment Authority took $300 million in shares, or 13 per cent (just days ahead of a key $1.8 billion arms deal between Moscow and Tripoli).

And a total of 9 per cent was reserved for a collection of well-to-do investors - Malaysian billionaire Robert Kuok, the Paulson hedge fund, NR Investments Ltd and Deripaska's ally and financial adviser, Nathaniel Rothschild.

In total, these investors accounted for over half of the offering, prompting comparisons with Russian state companies' rather staged IPOs in recent years.

The pressure from creditors - and the requirement from Viktor Vekselberg's SUAL to hold an IPO by the start of 2010 - were the driving forces behind the offering.

The IPO does undoubtedly give Deripaska a breathing space to once again restructure his debts, but it may not end there. His Basic Element holding may be forced into holding more IPOs in Hong Kong to fend off creditors' claims - and the Damocles' Sword of VEB taking over his stake in Norilsk Nickel still hangs over him.

Was the Hong Kong IPO a success for Deripaska? Yes, because he lives to fight on another day. But will it ultimately save his still-shaky business empire? For this, it is probably too soon to tell. 

t.wall@moscownews.ru