In Hong Kong, Rusal faced a set of problems:
- The Chinese investment community in 2010 knew very little about the Russian aluminum giant and was in no hurry to invest in it. In addition, even with the appointment of local independent directors by ex-Justice Minister Elsie Leung and Hong Kong Commodity Exchange Chairman Barry Chung, Rusal's shares were labeled too risky for private investors. The minimum lot was set at HK $ 1 million ($ 130 thousand). However, investors were found. During the IPO, VEB of the Russian Federation invested more than $ 600 million, Nathan Rothschild's company and US investor John Paulson took over $ 100 million each, and the Hong Kong oligarch Robert Kuok took another $ 20 million. Other major contributors include Hong Kong tycoon Li Ka-Shing ($ 100 million) and the Libyan Investment Authority investment fund ($ 300 million).
- Another problem for Rusal was the high requirements for filing documents. The main document of a listed company is a prospectus, the financial information of which must be carefully audited. More fears were added by the lawsuit of Deripaska's former partner Mikhail Cherny, who claimed 20% of the shares.
At the end of January 2010, the release took place. As a result of the placement on the Hong Kong Stock Exchange and a parallel IPO on the French Euronext (from which it left in 2018), the company sold 10.6% of its shares for $ 2.24 billion.On the first day of trading, quotations began to fall, and soon the share price collapsed by almost 30 % - both the fall in aluminum prices and the problems with Rusal's business in Guinea affected. Now the shares are traded at a price of HK $ 2.9 per share (on the Moscow stock exchange at 30.6 rubles).
Rusal's Hong Kong IPO was the first public offering by a Russian company and it showed that an IPO in Hong Kong is possible, and also opens up access to good liquidity and a wide range of large institutional investors. It is important to attract a reliable partner who will act as a consultant and help organize the promotion of the company, preparation of documents and attraction of potential investors.
An example of a foreign company that did not have a good relationship with the Hong Kong Stock Exchange is KAZ Minerals, a Kazakh copper mining corporation. Due to the low awareness of investors about the company and about Kazakhstan in general, KAZ Minerals in 2018 decided to terminate its activities on the exchange and carry out a delisting procedure. They preferred their home exchange to Hong Kong.
Is everything that bad in Hong Kong?
Working with Chinese partners, it is necessary to carefully build a market promotion strategy, provide for all the little things, create a strong Asian-oriented brand, competently conduct marketing activities, and only then will investors be confident in the company.One of such successful cases is the Italian fashion house Prada. It's no secret that the Chinese are crazy about brands. Whether it's an ordinary T-shirt, but with a distinctive sign, a manufacturer can sell it for colossal money. All luxury apparel, cosmetics and accessories manufacturers strive to conquer the Chinese market. So Prada staked on Hong Kong. The fashion house raised HK $ 2.14 billion in its 2011 IPO as investors who knew and trusted the brand quickly bought up the stock.
The largest manufacturer of suitcases and oversized bags Samsonite raised HK $ 1.25 billion through an IPO on HKEX. It is two times less than Prada, but the amount was still quite impressive.
Among the financial giants that have long trusted the Hong Kong Stock Exchange, HSBC, the largest UK bank in terms of assets and capitalization, and a large Canadian insurance and investment company Manulife Financial can be noted.
Why do foreign companies choose Hong Kong for listing?
In fact, the conditions for listing on the Hong Kong Stock Exchange are stricter than those in London and America. Both NYSE and Nasdaq are performing better in operating terms. However, if a company wants to expand its business in Asia, gain customer confidence and build business development in the long term, it needs to enter Asian markets, including financial ones.If you have questions or need advice on listing on the Hong Kong exchange, you can leave a request in the feedback form or contact our specialists:
Maxim Kuznetsov - vice-president of the RAUIE
investment@raspp.ru
WeChat: maximkuznetsov