Russian miner turns to Citi in $9bn flotation

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The Independent Online

Citi, the investment bank, will help to lead the London listing of the Russian coal giant Suek, one of a number of huge initial public offerings (IPOs) in 2010.

A leading mining banker at a rival institution who had pitched for one of the four roles on the float said this weekend that Citi had been lined up as one of the four advisers on the deal. It was not yet clear who will take the other positions, which were coveted by the big banks this winter as the flotation of 25 per cent of Suek could value the company at as much as $9bn, meaning juicy fees.

Together with the likes of London Eye owner Merlin Entertainments and travel technology group Travelport, IPOs in 2010 will dwarf the value of the 18 held in London last year, which raised less than £1.7bn in total. The bigger IPOs were shelved as owners remained sceptical of how much they could raise from share issues in the downturn.

Suek, which is the world's fifth biggest coal miner and is owned by oligarchs Andrey Melnichenko and Sergey Popov, is expected to list in both London and Moscow during the first half of the year.

Also known as the Siberian Coal Energy Company, the miner originally planned to list in mid-2008 but abandoned the plan as markets and commodities prices tumbled. Citi was one of the advisers at that time. Suek shareholders are also involved in the IPO of Russian aluminium giant United Company Rusal. They hold an 18 per cent stake in Rusal, which is majority owned by Oleg Deripaska.

Mr Deripaska snubbed London for a Hong Kong listing, a blow to the City as it has long been considered the financial capital of world mining. The likes of BHP Billiton, Rio Tinto, Anglo American and Xstrata are Ftse 100 standard bearers.

Instead, Rusal plans to raise up to $2.58bn from Hong Kong and a secondary listing on the Paris-based Euronext exchange to help pay off its debt mountain.

Advisers, led by Credit Suisse and BNP Paribas, had hoped to take advantage of the improved market conditions of the second half of last year and get a listing away by Christmas. The move was delayed by Hong Kong authorities scrutinising some worrying signs from the group: the IPO prospectus, published last week, included more than 30 pages of risk warnings as aluminium prices tumbled. In the first six months of 2009, Rusal made an $868m loss.

But, Rusal has attracted star names as cornerstone investors, including the investment vehicle of financier Nathaniel Rothschild. Mr Rothschild has also taken part in a $2bn convertible bond issue of Swiss commodities trader Glencore, which is expected to be a prelude to an IPO.