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Exclusive: Russia's En+ invites banks to pitch for $1 billion share sale - sources

Reuters  |  LONDON/MOSCOW 

By Afanasieva and Olga Popova

LONDON/(Reuters) - Russia's En+ Group has invited international banks to pitch for the sale of $1 billion of shares in the company that manages the aluminium and hydropower businesses of Russian Oleg Deripaska, three sources said.

The inclusion of Deripaska on a U.S. list of Russian oligarchs published on Jan. 29, however, is making some U.S. banks who worked with En+ on its initial public offering (IPO) in November wary about participating this time, one of the sources said.

The source, whose institution has been asked to pitch for the new business, said while there was no suggestion advising on the share sale would attract U.S. fines, compliance departments were concerned about any risk of reputational damage.

"Banks don't want headlines. Client selection is a massive issue," said the banking source.

The has said the report, which also includes lists of senior political figures and the heads of state-run companies, was not a sanctions list.

A for En+ declined to comment on the planned share sale or whether U.S. banks might be reluctant to work with the company because of the U.S. list.

A said: "We do not comment on market rumours."

Deripaska and family members own 76.6 percent of En+, which has assets in metals and energy, including a 48 percent controlling stake in Hong Kong-listed Russian

When En+ listed in London, U.S. institutions of Merrill Lynch, and JP Morgan, along with Swiss and Russian banks and led the float.

The $1.5 billion IPO was the first major listing in by a Russian company since 2014, when Russia's annexation of the triggered Western sanctions against


Since the IPO, Deripaska and another 95 Russians worth more than $1 billion were named in a report the Department was required by to compile as part of the Countering America's Adversaries Through Sanctions Act (CAATSA).

"The inclusion of individuals or entities in this report, its appendices, or its classified annex does not, in and of itself, imply, give rise to, or create any restrictions, prohibitions, or limitations on dealings with such persons by either U.S. or foreign persons," the said on its website.

However, several on the list said Russian companies may start having problems in their dealings with international banks because of the report.

Deripaska was ranked by magazine on Wednesday as Russia's 20th richest man, with a net worth of $6.7 billion. The industrial assets that form the core of his wealth were acquired during the chaotic sell-off of Russian state assets in the 1990s, following the collapse of the

Along with En+, Deripaska also controls Russian GAZ and has agriculture, airport and other businesses.

One of the sources said the planned share sale by En+ was expected to happen after Russia's in March, which incumbent is widely expected to win.

It was not immediately clear why En+ wanted to sell shares or whether the offering would be of new or existing shares.

Before the November listing of shares in and Moscow, the company's net debt was $13.1 billion. It reduced that by repaying a $943 million loan to VTB, Russia's second-largest lender, following the listing.

In December, En+ said its third-quarter net profit rose 43 percent to $350 million helped by higher aluminium prices.

(Additional reporting by Polina Devitt; editing by David Clarke)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, February 14 2018. 21:06 IST