Petropavlovsk plans iron ore unit's HK IPO for Oct-UPDATE 3
Trade the News
Saturday September 11, 2010 05:50:10 PM GMT
* Miner to raise about $500-600 mln in IPO, two sources say
* Non-precious metals division to be renamed IRC Ltd
* Jay Hambro named chairman, Yury Makarov new CEO
* IPO needs final approval from Hong Kong stock exchange
* Petropavlovsk shares up 0.4 pct at 1159p, index down 1 pct
(Adds comments from sources, recasts)
By Julie Crust and Kennix Chim
LONDON/HONG KONG, Sept 10 (Reuters) - Russian miner Petropavlovsk will proceed with a Hong Kong listing of its non-precious metals division in October, as initial public offerings (IPOs) pick up in improving market conditions.
The IPO will bring the division, which includes the iron ore operations, closer to its booming Asian client base.
London-listed Petropavlovsk, which said it had reached an advanced stage in its preparations, did not give any guidance on the value of the IPO, or say how much it intended to retain.
The miner planned to raise about $500 million to $600 million in the IPO, two sources close to the deal said on Friday. The group received approval from the Hong Kong Stock Exchange on Thursday, the sources said, adding that the company would kick off its IPO pre-marketing on Sept. 13.
One of the sources said that Petropavlovsk planned to issue 964 million shares in the IPO.
The company was not immediately available for comment.
Andy Davidson, an analyst at Numis Corp, said the widely expected move was positive and had the potential to unlock significant value for Petropavlovsk.
"We currently value the iron ore assets at 184 pence a share out of our 625 pence NAV (net asset value) and believe the IPO has potential to double this, given the previous pre-IPO funding," he said.
Petropavlovsk shares were up 0.4 percent at 1159 pence by 1046 GMT, outperforming a 1.0 percent dip in a British mining index and valuing the group at 2.1 billion pounds ($3.24 billion).
Jay Hambro, who will be executive chairman of the division, told Reuters last month that Petropavlovsk was keen to keep a controlling stake in the division.
Under Hong Kong stock exchange rules, companies need to have 25 percent of their shares as free float, implying Petropavlovsk would keep a stake of between 51 percent and 75 percent.
HONG KONG
At least 16 IPOs are planned in Hong Kong this month. The pipeline of potential listings has improved since May and June when a number were pulled, but some companies such as Jetion Solar Holdings remain wary.
Shares in the world's top aluminium producer UC RUSAL dived on their debut in January and the stock has traded below the IPO price of HK$10.80 ever since.
Petropavlovsk's deal is being arranged by Bank of America Merrill Lynch, UBS and BOC International.
A group of Hong Kong-based investors in June agreed to take a $60 million equity stake, valuing the division at $860 million.
The company said it expected to buy the shareholdings of the Hong Kong-based investors at the time of listing to speed up the process and that the majority of investors would instead take part as lead investors in the IPO and invest their original investment amount at the IPO price.
Cheung Kong's chairman Li Ka-shing, a Hong Kong billionaire, is a cornerstone investor in the IPO, sources said.
Petropavlovsk said the division had been reorganised under a new subsidiary, IRC Ltd. It will also include the Vanadium Pentoxide joint venture, the Titanium Sponge project, infrastructure projects, and the group's interest in the Giproruda Technical Institute.
IRC will be headquartered in Hong Kong and will have Yury Makarov as its chief executive.
The iron ore business in the Russian far east is estimated to contain over 1 billion tonnes of iron ore. It had been spun off as Aricom, where Jay Hambro was CEO, before being re-acquired in 2009.
The IPO requires final approval from the Hong Kong stock exchange's listing committee. (Editing by Sharon Lindores) ($1=.6490 Pound)
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