Russian aluminum company UC Rusal has gained listing approval from the Hong Kong securities regulator on its planned US$2 billion offering, allowing it to list in the city as early as the end of January, people familiar with the situation said Friday.

But the green light was given on the condition that it won't sell the deal to retail investors, in a bid to "protect" Hong Kong's retail investors from the complexities of the deal.

Rusal, which has also applied for an IPO on the Euronext stock exchange in Paris, earlier this month completed the restructuring of US$7.4 billion in debt with more than 70 Russian and global banks.

As a result of the agreement with banks, there won't be any dividend payout for Rusal shareholders until its debt/Ebitda falls below three.

Proceeds from the Paris and Hong Kong listings will be used to help pay off creditors.

Friday's decision was reached after the Securities and Futures Commission met earlier in the day to deliberate on the matter. The SFC is a quasi-governmental securities regulator.

"The SFC decision of no offer to retail investors via the Hong Kong public offering tranche does not have an impact on the company's target institutional investor group as well as on its listing plan and valuation," one person said, adding bookbuilding for the IPO will kick off in early January as planned.

As a result of the condition, only institutional investors and high-net-worth individuals who fulfill certain "investment guidelines" can participate in the offering. The people familiar with the situation didn't elaborate on the guidelines, only noting the guidelines were "creative ways to discourage retail investors from participating."

One such way would be to set the board lot size so large that retail investors would be deterred by the high amount needed to buy even one board lot of shares.

But three people said Rusal has already garnered "substantial demand" for the IPO, with some committed as cornerstone investors. The Hong Kong Stock Exchange's listing committee already gave a conditional go-ahead for Rusal's offering Thursday, people familiar with the situation said earlier Friday, as Rusal gave reassurance that a US$4.5 billion loan, due in October next year, will be refinanced.

People close to the company said Thursday that Sberbank Rossia (SBRBF, SBER.RS), the state-controlled savings bank, agreed to extend a multiyear loan to Rusal to allow it to repay a $4.5 billion rescue loan from another Russian state bank, Vnesheconombank, or VEB.

-By Amy Or, Dow Jones Newswires; 852-2832 2335; amy.or@dowjones.com
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