Hong Kong’s Exchange Sees Up to 10 Russian IPOs (Update1)
February 18, 2010, 2:43 AM EST(Adds IPO data from third paragraph. Further comment from Arculli throughout.)
By Hanny Wan and Haslinda Amin
Feb. 18 (Bloomberg) -- Hong Kong Exchanges & Clearing Ltd. expects five to 10 Russian companies to seek listings in the city in the “next couple of years” even after United Co. Rusal’s 29 percent plunge since its January debut.
“I’d like to see five, 10 companies from Russia list here,” Hong Kong Exchanges’ Chairman Ronald Arculli told Bloomberg Television. “That’s probably being a bit overly optimistic, but it won’t surprise me if it happens.”
Funds raised through IPOs in Hong Kong surged 270 percent to HK$243.85 billion ($31.35 billion) in 2009 from the previous year, according to stock exchange data available on its Web site. Rusal, the biggest loser of the five stocks that have debuted on the exchange this year, is set to record the worst first month return of any new offering since China South City Holdings Ltd., which lost 34 percent in the month after it debuted on Sept. 30, according to Bloomberg data. The average return one month later for all IPOs in Hong Kong from the start of last year is 24 percent, the data show.
Rusal, barred from marketing to retail investors on concern over the company’s debt, won investments from Hong Kong billionaire Li Ka-shing and New York hedge-fund manager Paulson & Co. Arculli said Hong Kong’s “fairly high” listing requirements helped improve the company’s disclosure and transparency, which Rusal viewed was a “worthwhile” exercise.
‘More Tough, More Stringent’
“If anyone thinks that coming to Hong Kong was an easier option than other exchanges, they better think again because the exercise, from their point of view, they felt was really worthwhile,” he said. “Despite the fact that they seem to be complaining that we were a little bit more tough, a little bit more stringent than other exchanges, at the end of the day it worked out well for them.”
Rusal, the world’s largest aluminum maker, dropped 6.7 percent to HK$7.47 at 3:30 p.m. in Hong Kong, widening the losses since its Jan. 27 debut to 29 percent. That lagged behind the 2.1 percent gain in the city’s benchmark Hang Seng Index. The company raised $2.2 billion last month in a Hong Kong initial share sale, the first by a Russian company.
Russian companies may raise $2 billion selling shares in Hong Kong in the second half of this year, Arculli said in a Feb. 4 Bloomberg Television interview from Moscow. Hong Kong Exchanges has received IPO applications from more than 30 companies, Arculli said yesterday, declining to specify whether they are local or from overseas.
Not Counting Chickens
“Rusal’s listing has definitely aroused the interest of Russian businesses, both private and state-owned, about Hong Kong,” said the chairman of the operator of Asia’s third- largest bourse. “Until they actually put in the forms, I won’t count my chickens.”
IPOs raised a record HK$319.53 billion in Hong Kong in 2006, according to Bloomberg data.
Rusal’s Chairman Oleg Deripaska is expected to list the company’s power-generation subsidiary EuroSibEnergo on the Hong Kong exchange this year, raising between $1 billion and $2 billion, the South China Morning Post reported, citing unidentified bankers who worked on the Rusal share sale.
--With assistance from Paul Gordon in Hong Kong. Editors: Nick Gentle, Sam Waite.
To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net.
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net.
