Leading Russian metallurgical company Metalloinvest has hired Alexander Blumhardt and Manfred Grundke, two top managers of the global construction materials producing group Knauf, to serve on the board as independent directors to boost the company’s corporate governance and ESG profile, the company announced on October 8.
"Alexander Blumhardt and Manfred Grundke will bring international corporate governance best practices to the board of directors,’’ chairman of the board Ivan Streshinsky said in a statement.
Grundke will also chair the newly created Sustainability Committee of the board, the company said, as Russian companies become more aware of the mounting pressures to improve their environmental, social and governance (ESG) profiles.
"Sustainable development is integrated into all our business processes and is one of the priorities of Metalloinvest's development strategy. The establishment of the board’s Sustainability Committee reflects the strategic importance we place on this area. The committee will help manage sustainability risks, ensure compliance with ESG principles, and further enhance disclosure transparency and openness around Metalloinvest's activities for all stakeholders," Streshinsky added.
Owned by Russian telecoms and metals magnate Alisher Usmanov, Metalloinvest is one of Russia’s biggest metallurgical concerns and a market leader in iron and steel production, amongst other things.
The company has been striving to improve its corporate practises and was recently rewarded with an upgrade by international ratings agency Standard & Poor’s (S&P) that increased the company’s rating on September 21 to investment grade BBB- with a stable outlook.
"We are pleased that Metalloinvest’s strong credit metrics, as well as its proactive debt management and commitment to prudent financial policy, have now been reflected in a ‘BBB-’ credit rating from S&P. This rating level matches the sovereign rating and that of leading public companies in the sector within the S&P universe," CFO of Metalloinvest Alexey Voronov commented in a press release at the time.
As reported by bne IntelliNews, Fitch Ratings has also previously upgraded ratings on Metalloinvest to investment grade, ahead of the company’s possible IPO.
The twin upgrades makes Metalloinvest the only Russian metals company with an investment grade rating.
The company has been enjoying a windfall this year after commodity prices took off in the last quarter of 2020 as the coronavirus (COVID-19) pandemic began to fade following the release of vaccines. Iron prices in particular have risen nine-fold this year.
Metalloinvest reported 65% year-on-year growth in revenues to $5bn for 1H21 under IFRS, with Russia accounting for 37% of total revenues. Ebitda soared 175% y/y to $2.9bn, attributed to measures to improve operating efficiency.
The Uzbek-born billionaire Usmanov has been in business since before the fall of the Soviet Union making his first million with the production of plastic shopping bags during perestroika. He then went into banking and then metals as featured in a bne IntelliNews profile “The path of a game-changer.” His most famous investment was to buy a 10% stake in Facebook from Mark Zuckerberg in the midst of the 2008 crisis well ahead of the company’s IPO that earned Usmanov billions of dollars in profit. Now he is retreating from business to concentrate on philanthropy and the sport of fencing.
Investors are watching the company closely, as it may take advantage of the good market conditions and current enthusiasm for Russian equity that has caused an IPO boom to float.
Ivan Streshinsky, the general director of USM Holding that controls Metalloinvest, did not rule an IPO out during a recent interview with Kommersant, but the owners remain uncommitted so far.
“An IPO is not an end in itself, but a means to achieve something. It has both positive and negative sides,” Streshinsky told Kommersant. “We are considering the IPO option and will consider it when a convenient moment arises when it turns out to be really necessary. We have always set ourselves the task so that, if we wish, we can, relatively speaking, go to an IPO with the flick of a finger.”