Miner Suek aims for FTSE 100 in new London listing plan

Russian coal producer to opt for a full $5bn trade in shares after improving its governance structures

Mark Leftly
Sunday 23 October 2011 07:31

The revamped plans of the Siberian Coal Energy Company (Suek) for a London listing involve a full trade in shares allowing it to qualify for the elite FTSE-100 index.

Before Suek abandoned a planned London listing last year, Russia's biggest producer of thermal coal (used in power plants) had planned to trade only global depository receipts (GDRs). This is effectively a secondary form of share ownership, allowing the company to register itself in more tax-friendly jurisdictions, such as the Netherlands.

It also meant that the company would not have had to meet the FTSE's stringent corporate governance standards. It is understood that Suek believes that it has improved its structure over the past year, though it is 50 per cent owned by Russian oligarchs Andrei Melnichenko and Sergei Popov. "They have taken a long, hard look at their corporate governance," said a mining sector source. "They want a big UK profile and a premium UK listing."

The flotation is expected to go ahead in June and could value the company at close to $5bn, giving it a chance to qualify for the FTSE 100. This would give Suek access to some of the City's biggest investors.

Many Russian companies have decided against a main board listing and gone for GDRs. These include Russian steelmaker Evraz and steel pipe producer OAO TK.

Suek, which is being advised by Credit Suisse and Citi, is on the hunt for an established Square Mile mining figure to chair the company. Vladimir Rashevsky, the current general director at Suek, is expected to become chief executive.

The news of the Suek listing is a boon to London, which suffered two major share issue cancellations last week. Indian paper producer Bilt postponed a $330m flotation barely a week after the plans had emerged publicly.

This was followed by the canning of Dubai-based oilfield services company Topaz, which was set to raise $500m. The owner, Renaissance Services, blamed the postponement on unrest in the Middle East, which meant that investors were unlikely to pay top dollar for the shares.

The most anticipated flotation in London, the $60bn share sale of commodities trader Glencore, is still going ahead, though it has been delayed slightly by the royal wedding and recent market unrest caused by the crisis in Japan.

Originally, its plan was to start trading at the end of this month, but the target date is now 18 May. The roadshow, where potential investors get to quiz management about the business to decide whether or not they want to invest, will start on 4 May.

Bankers involved in the deal are understood to have warned Glencore that many City fund managers could be on holiday towards the end of April as they look to avoid the travel chaos caused by Prince William's marriage to Kate Middleton.

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