* Shares open at 320 pence
* Evraz one of a handful of Russian companies moving to
* Company may struggle versus peers due to high debt
* Abramovich owns 35 pct stake
By John Bowker and Megan Davies
MOSCOW, Nov 7 Shares in Russia's Evraz
rose more than 9 percent on its first day of trading on the
premium segment of the London Stock Exchange, as the steelmaker
part-owned by tycoon Roman Abramovich came a step closer to the
prestigious FTSE 100.
Evraz is among a string of Russian companies seeking a
higher international profile, greater liquidity, a broader
shareholder base and better long-term access to capital markets
via a London listing and inclusion in its blue-chip index.
That trend has led to concern from investors that it is too
easy for companies with low free floats and hazy corporate
governance standards to enter the index, and has prompted FTSE
Group to look at tightening its requirements.
The UK Listing Authority (UKLA) gave Evraz a waiver to move
to a premium London listing despite having a free float of 23.4
percent, below the usually required minimum of 25 percent, a
spokeswoman for the Russian firm said.
That means under FTSE's current rules, Evraz will be
eligible for its UK index at the next review in December, but
could be hit by the proposal to raise free float requirements.
"If Evraz gets included ... and the rules subsequently
change to a minimum 25 percent free float then it would need to
increase its float at a later date if it wanted to continue
index membership but would be given between a 12 and 24 month
grace period to achieve that," a spokesman for FTSE said.
Other Russian firms to come to London recently are Polymetal
which started trading a week ago and Polyus
Gold which recently announced plans for a London
The introduction of the three miners, who would be the first
Russian companies to enter the FTSE 100, would further increase
the influence of resource stocks in the index.
Russian potash miner Uralkali is also considering
a full stock market listing in London next year.
Evraz's shares officially opened on Monday at 320 pence, and
were up 9.4 percent at 350 pence by 1301 GMT, valuing the
company at about 4.4 billion pounds ($7 billion). The European
index of basic resources stocks was down 1.6 percent.
Chelsea soccer club owner Roman Abramovich owns a 35.32
percent stake in the company, according to its press release,
now valued at 1.55 billion pounds.
Abramovich, who according to Forbes magazine has a fortune
of $13.4 billion, is embroiled in a $6 billion London court
battle with fellow Russian oligarch Boris Berezovsky, who
accuses his former protege of intimidating him into selling
shares in oil company Sibneft for a fraction of their value.
VTB Capital analyst Igor Lebedinets said he expects Evraz's
shares to rise in the short term after a period of
underperformance, partly connected with the passing of the
dividend payment date, but warned that the rally may not be
"Evraz looks more risky versus its peers due to its high
level of debt. It doesn't deserve a premium in these turbulent
times when leverage matters," he said.
Evraz reported net debt of $6.04 billion in its half year
results last month, down 15 percent from the end of 2010.
That figure is 2.1 times the company's earnings before
interest, tax, depreciation and amortisation (EBITDA) for the
last 12 months, VTB said, compared to 1 and 0.7 times at Russian
peers Severstal and NLMK respectively.
Evraz also recently scrapped its proposed sale of a 40
percent stake in coal miner Raspadskaya due to market
volatility, a move that could have helped deleverage the
The company declared its first interim dividend since the
financial crisis alongside a special payout of $402 million last
month. The record date after which new shareholders were not
entitled to receive the dividend was Oct. 28.
The company's exchange offer received acceptances from 98
percent of shareholders, it said in a statement on Monday.
The company is moving its Luxembourg domicile to the UK.
Evraz, which previously had a listing of global depositary
receipts in London, said on Oct. 17 it would offer to switch
these in to shares in the newly UK incorporated company. Under
the swap shareholders would receive nine new shares in Evraz for
each existing share they owned.
Morgan Stanley and Credit Suisse are acting as joint
sponsors to Evraz.