Rusal Seeks CIC, Temasek as Investors for IPO, HKEJ Reports

United Co. Rusal, the biggest aluminum producer, is in talks with parties including China Investment Corp. and Temasek Holdings Pte to invest in a Hong Kong share sale, the Hong Kong Economic Journal said, without citing anyone or providing details of the investments.

Wu Xueling, a Beijing-based official at CIC, the nation’s sovereign wealth fund that holds almost $300 billion of assets, declined to comment. Temasek spokespeople in Singapore weren’t immediately available for comment.

Rusal, controlled by billionaire Oleg Deripaska, has applied to sell about 10 percent of the company’s shares in a Hong Kong initial public offering to try to cut debt of more than $16 billion. Metal prices are rising as the global economy recovers, with the Reuters/Jefferies CRB Index, a gauge of 19 raw materials and commodities, hovering at this year’s high.

CIC is increasing investments in commodities after losing money on financial companies including Blackstone Group LP and Morgan Stanley. The Beijing-based company will provide SouthGobi Energy Resources Ltd., a unit of Vancouver-based Ivanhoe Mines Ltd., a $500 million convertible debenture to expand and develop coal reserves in southern Mongolia, SouthGobi said yesterday.

Temasek, Singapore’s government-owned investment firm, in June agreed to buy a stake in Olam International Ltd., a Singapore-based agricultural commodities supplier. Temasek would consider investments in resources as the sector provided a proxy for economic growth, especially in emerging economies in Asia and the rest of the world, Nagi Hamiyeh, managing director of investments in natural resources at Temasek, said on March 24.

Aluminum Demand

Rusal, based in Moscow, said earlier this week that banks holding half its foreign debt approved a restructuring of the company’s borrowings. The company will meet foreign creditors, who hold a total of $7.4 billion of its debt, after agreeing new terms with Russian banks and shareholder Onexim Group, said Oleg Mukhamedshin, head of capital markets, on a conference call.

Rusal would be the only Russian company with shares trading in Hong Kong.

Aluminum futures in Shanghai rose 31 percent this year as investors bet that China’s $586 billion stimulus spending will spur demand from builders and carmakers. Alcoa Inc., the largest U.S. producer of the metal, said Chinese demand will rise 4 percent in 2009, compared with a previous prediction of no growth.

Aluminum Corp. of China, China’s biggest producer of the metal, won’t buy shares in Rusal’s share sale, Caijing Magazine reported Oct. 12, citing an unidentified official with the Chinese company. The company, known as Chinalco, had considered buying a stake in the Russian company, the magazine reported earlier.

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