Deripaska rejects London for future flotations

Russian oligarch to avoid the costs assocaited with corporate regulation in the traditional centre of mining finance. Mark Leftly reports from Moscow

Oleg Deripaska, the Russian metals billionaire, will turn his nose up at "costly" London when he floats major parts of his Basic Element investment empire over the next two years.

The 43-year-old oligarch shocked the mining industry last year when he chose Hong Kong over London for the listing of UC Rusal, which valued the world's biggest aluminium producer at $20bn. London has traditionally been the global centre for mining finance.

Mr Deripaska plans to float a number of companies by 2013, such as construction and auto machinery firms. However, fee-hungry bankers in London are unlikely to secure many juicy roles on these multi-billion-dollar transactions.

"London's a great place [for flotations], but not at the moment," said Mr Deripaska, who owns a £25m, six-storey house in Belgravia. "I can't see the advantage when you compare the costs with Russia, Chinese, European platforms. They are slightly more efficient. One of the costs [in London] is regulation, corporate rules."

Mr Deripaska has two other major reasons to be dubious about the UK. In 2009, LDV fell into administration, three years after Mr Deripaska had bought the Birmingham van maker.

At the time, Mr Deripaska was struggling with Rusal's massive debt burden – still nearly $11.5bn on 31 December, despite heavy restructuring – and was angered by the Government's refusal of a £30m bridging loan to save LDV.

The business secretary then was Lord Mandelson, who was at the centre of Mr Deripaska's other irritation with the UK: "yachtgate". In 2008, it was revealed that Mr Mandelson and the then shadow chancellor, George Osborne, had met Mr Deripaska on his yacht in Corfu, which sparked a huge feud between the politicians.

Mr Deripaska is likely to maintain his focus on the Hong Kong Stock Exchange for his next batch of listings. He said that he has forged close relationships "at various levels" of the Chinese government, and sees potential for growth in fast-developing inner Mongolia and the western provinces.

The next listing is likely to be of his EuroSibEnergy power group, valued at up to $5.6bn. Attempts to float the company stalled late last year, when the Beijing would not give approval to state-owned China Yangtze Power Company to become a cornerstone investor.

However, Mr Deripaska said that an announcement on a "transaction" involving EuroSibEnergy was due soon, which should then lead to a listing. It was recently reported that the company was in share swap discussions with RusHydro, a Russian state-owned company.

Rusal, Mr Deripaska's best known company, might also face a stock exchange shake-up. It's first deputy chief executive Vladislav Soloviev said that Rusal would decide by the end of the year whether or not to continue with its secondary listing on Euronext in Paris.

"We have to think about which exchange gives us most liquidity," said Mr Soloviev, who is considering swapping Euronext for another exchange. "For example, in Toronto there are a lot of metal producers listed and in Russia we have access to investors."

Rusal is currently involved in a huge battle with Interros Holding over the future of Norilsk Nickel, a nickel and palladium giant based in northern Siberia. Interros owns about 30 per cent of Norilsk and is considered to have control of the company, while Rusal has 25 per cent and believes that the company is hugely undervalued due to poor management.

The fight has even made its way to London, where an arbitrage court is set to decide on accusations from both sets of shareholders that the other has breached an agreement on the management of Norilsk. Rusal is believed to be seeking $1.5bn in damages.

Mr Soloviev said: "Norilsk is currently worth $51bn, but we believe it could be $80bn or even $100bn through efficiency and [better] corporate governance."

He argued that Norilsk needed to improve its logistics and should combine warehouses to strip out duplication of costs. Also, as Norilsk is in effect a monopoly, the company should be getting more money for its products.

For now, there is something of a ceasefire, as a vote on the membership of the board resulted in a better balance of representatives of Rusal and Interros, as well as independents who are acceptable to both parties.

Mr Deripaska is said to tightly manage Rusal. Vladimir Polin, the director of Rusal's aluminium division east – which runs the companies five largest smelters and is building two more – said "Let's just say he [Mr Deripaska] keeps an eye on things."

As are investors, who are now expected to visit the smelters once every six months as Rusal faces greater scrutiny as a public company. Evgeniy Nikitin, the managing director at the Krasnoyarsk smelter in southern Siberia, said that a group of 26 investors toured his facility shortly after the listing in January last year.

News
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Sport
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
football
Sport
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
film
PROMOTED VIDEO
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
News
people
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
News
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Life and Style
fashionCustomer complained about the visibly protruding ribs
Voices
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Sport
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
sport
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
life
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

The benefits of being in Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Test Analyst - UAT - Credit Risk

£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

The BBC’s wolf in sheep’s clothing

What will Evan Davis be like on Newsnight?
Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

Finding the names for America’s shame

The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

Inside a church for Born Again Christians

As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

Olivier Rousteing is revitalising the house of Balmain

Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
Cancer, cardiac arrest, HIV and homelessness - and he's only 39

Incredible survival story of David Tovey

Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little