Enlarged Rusal aluminium group aiming to raise $10bn from flotation in London

Rusal, the newly created aluminium group, is to seek an initial public offering (IPO) in London, possibly by the end of this year.

The merger of Rusal, Sual and Glencore’s alumina assets creates the world’s largest aluminium producer, eclipsing Alcoa and Alcan, of North America.

The enlarged Rusal plans to raise up to $10 billion (£5.08 billion) by listing in London in a move that will allow its key shareholders to cash out. The listing will also help to finance Rusal’s ambitions to become a metals giant to rival BHP Billiton and Rio Tinto.

The merger agreement stipulates that there must be an IPO within three years.

Alexandr Bulygin, the chief executive of Rusal, has said that he hopes to push through the listing much sooner, however. Sources close to the company say that the IPO could take place this year.

Two thirds of the group is owned by Oleg Deripaska after the completion of the merger. Sual’s shareholders, primarily Viktor Vekselberg and Len Blavatnik, will own 22 per cent and Glencore, the Swiss metals trader, will own 12 per cent.

The new chairman of the group will be Mr Vekselberg after plans to appoint Brian Gilbertson, the South African who brought BHP and Billiton together, were dropped.

Mr Gilbertson is understood to have fallen out with Mr Vekselberg over the payment of a $50 million bonus, which was to be awarded if Sual listed or did a deal. Mr Gilbertson is not thought to have been involved in bringing together Rusal and Sual.

Mr Gilbertson is also thought to have run into opposition from Rusal executives who felt that he was trying to dictate strategy, particularly in looking for future acquisition targets.

Mr Vekselberg’s contract as chairman is for one year, raising the possibility that he will step down after an early Rusal listing. A quick IPO would depend on Rusal being able to meet London Stock Exchange rules on corporate governance.

Mr Vekselberg said: “While continuing to boost our production volumes and complete our expansion projects, we will promote a world-class corporate governance structure, enabling us to meet the highest international standards.”

The enlarged Rusal will have sales of more than $12 billion and a market capitalisation estimated at up to $30 billion. It will produce four million tonnes of aluminium a year, about 500,000 tonnes more than Alcoa or Alcan. Rusal’s assets include four bauxite mines, ten alumina refiners, fourteen aluminium smelters and three aluminium foil factories.