Russian firms plan Hong Kong listings as president visits

illustration photo - source: AFP

Medvedev led a business delegation to the Chinese financial hub as he seeks to diversify Russia's economy beyond oil and gas and entice more foreign capital into what he has called a "very bad" domestic investment climate.

He held talks with Hong Kong's Chief Executive Donald Tsang and visited the stock exchange, where he said several Russian companies were considering Hong Kong listings.

"By working at your stock exchange and in Hong Kong on the whole we receive additional opportunities for work with China and a platform for work in the Asia-Pacific region," Medvedev said at the stock exchange's trading hall.

Last year billionaire Oleg Deripaska's United Company RUSAL, the world's top aluminium producer, became the first Russian company to list in Hong Kong.

Medvedev's top economic adviser Arkady Dvorkovich told reporters that four to five Russian companies including Deripaska's power company EuroSibEnergo were considering Hong Kong listings.

Deripaska, who also accompanied the Kremlin chief on the trip, said EuroSibEnergo planned a listing next year but refused to confirm it would be in Hong Kong.

He stressed that more Russian companies needed to be closer to clients and investments in Asia.

"Hong Kong is a unique platform to move to the Asian markets," he said.

Tsang earlier described the first two Hong Kong listings of RUSAL and IRC, an iron ore subsidiary of miner Petropavlovsk, also floated last year -- as a "breakthrough."

Yuri Soloviev, president of VTB Capital, the investment banking arm of Russian state bank VTB, said Russian firms were planning to list "billions of dollars (in stocks) this year" on the Hong Kong Stock Exchange.

"This is one of the most liquid markets globally, and therefore the companies we are representing here will be sufficiently capitalised (as a result of listing)," he told reporters.

He did not name specific companies but said that energy, commodity, transportation and consumer firms were eyeing Hong Kong listings.

Medvedev said he also wanted to tap into Hong Kong's financial expertise and told Tsang that he saw the former British colony, among the world's most open economies, as a model for Moscow.

"Hong Kong's experience is extremely indicative for us," he said.

"We must lift excessive administrative barriers -- Hong Kong's experience in this aspect could be used in our country and could also help to establish a global financial centre in Moscow."

But his travelling companions voiced scepticism, with Alexander Voloshin, head of a working group in charge of turning Moscow into a top financial centre, telling reporters: "We will hardly be able to be as liberal as Hong Kong."

Critics say Moscow has failed to tackle endemic red tape and corruption, while Medvedev last month said graft had the country "by the throat."

Tsang told the Russian leader bilateral trade had grown in 2010 by a "remarkable" 63 percent, and highlighted Hong Kong's fledgling market in yuan-denominated bonds after Russian state bank VTB issued so-called "dim sum" bonds last year.

"Russian firms can use Hong Kong as a stable and efficient platform to settle... trade in renminbi," Tsang told Medvedev.