Rusal of Oleg Deripaska comes to Russian offshore

Oleg Deripaska
Oleg Deripaska

Aluminium producer UC Rusal will come under the jurisdiction of Russian Federation. This decision was made on Friday August 17th by the Board of Directors. At the moment, the organization is registered on the Island of Jersey, according to UC Rusal.

On this news, the company’s quotes on the Hong Kong stock exchange reacted with weak growth. As of 11:12 GMT, UC Rusal securities are worth 24,150 rubles per share, adding 0.25% to the closing level of yesterday’s trading. By the end of Thursday, they were trading at the level of 24,090 rubles.

Redomiciliation of UC Rusal to Russian jurisdiction is carried out due to the fact that the company intends to receive state support from the authorities. This is unlikely to help lift US sanctions against the company, which are decisive for the dynamics of shares. Without addressing the issue of easing sanctions, the company’s shares are likely to stagnate.

As per message of the company, soon the management of the organization has to prepare an action plan for the change of jurisdiction. In particular, it will spell out further steps in order to comply with UC Rusal requirements of stock exchanges, regulators and other stakeholders.

General Director of “Sputnik Capital Management” company Alexander Losev says that the only advice he could give to investors in relation to UC Rusal shares is “to stay away from them” until the sanctions are lifted from the company. “The change of jurisdiction does not mean anything: the enterprises of the Russian defense industry and “Power Machines” are under US sanctions, and are being in Russian jurisdiction,” the expert reminded.

The final decision on the transition of UC Rusal under Russian jurisdiction will be made by the shareholders. The Board of Directors agreed to this measure after the adoption of the law on special administrative regions in Russia. Offshore companies will be created on the territory of Russky Island in Primorye and Oktyabrsky Island in Kaliningrad region.

On April 6 this year, the United States included in the sanctions list of businessman Oleg Deripaska and assets under his control, including En+ Group and UC Rusal. On Thursday, August 16, the En+ Group Board of Directors approved the change of the place of registration of its “daughter” En + Holding Limited from Cyprus to Russia. En+ Group was the first company to decide to move to Russian offshore companies.

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