Metalloinvest, run by Arsenal FC's billionaire shareholder Alisher Usmanov, is in talks to sell a stake in the mining giant to Japan's Mitsui ahead of a London listing next year.
The Moscow-based group wants to secure Mitsui as a cornerstone investor so as to provide "a benchmark" for the value of the flotation, according to a source close to Metalloinvest. For example, selling a 10 per cent stake at $1.5bn-to-$2bn would value the group at $15bn-to-$20bn – though some experts believe that Metalloinvest could be valued as high as $30bn when it joins the London Stock Exchange in 2011.
Such valuations would comfortably put Metalloinvest in the FTSE 100 index of biggest companies, where it would have access to major sources of capital. The sale of a minority stake to such a huge conglomerate as Mitsui would provide investors with confidence that Metalloinvest is worth the high valuations mooted.
The deal is expected to give Mitsui rights to be the agent to sell Metalloinvest's products, such as iron ore and steel, into Asia. Mitsui is being advised by Lazard, while Bank of America Merrill Lynch is acting for Metalloinvest.
The top-secret talks have been going on for around a year, according to two sources. It is hoped a deal will be struck by Christmas. "This has taken a long time, but that's the typical Japanese way of doing things. They're cautious," said one source. "In theory, this establishes a pretty good benchmark for Metalloinvest's flotation, and they are very financially driven guys."
Mr Usmanov is best known in the UK as one of the biggest shareholders in Arsenal, and the ongoing speculation that his Red and White Holdings vehicle will one day launch a takeover bid for the north-London club.
Uzbekistan-born Mr Usmanov also has a major stake in Mail.ru, the Russian social-media group that has a 2.38 per cent shareholding in the Facebook empire. Mail.ru also plans to list in London – by the end of this year, against probably the second quarter of 2011 for Metalloinvest – in a move expected to value the company at up to $5bn.
The Siberian Coal Energy Company (Suek) had planned to float in London this year but has delayed to 2011. The firm is understood to be on the look-out for potential non-executive directors for when it does decide to list.
London's listing market had a boost on Friday when online betting exchange Betfair announced it would make its stock exchange debut at £13 a share, towards the top end of expectations. This values Betfair at £1.39bn and raises more than £200m for shareholders.