Glencore Plc’s decision to reshuffle its Russian aluminium investment is cementing a relationship with an old companion that underpins its position as the world’s top trader of the metal.
The Swiss firm will swap its 8.75% stake in aluminium producer United Co Rusal, which is controlled by Oleg Deripaska, for global depositary receipts of En+ Group Plc, a commodities and power company that the billionaire plans to take public next month.
The deal signals a public backing for his ambitions to list En+ at a valuation that some analysts and investors say seems excessive, and extends a mutually-beneficial relationship with Glencore chief Ivan Glasenberg stretching back a decade. 
It may also help the Swiss trader remain the main buyer of Rusal’s metal – in 2016 it bought $2.3bn of aluminium and aluminium alloys under a long-term contract expiring next year. 
Glencore is seeking to extend that contract, although Rusal has also started informally sounding out rival traders, according to people familiar with the matter, who asked not to be identified because the matter is private.
“This feels like Glencore trying to give a vote of confidence ahead of the IPO,” said Paul Gait, a mining analyst at Sanford C Bernstein. “Glencore is able to secure access to offtake by being flexible in its relationships with its key customers.”
Glencore also will help Deripaska in Ukraine, where it plans to buy Rusal’s Nikolaev Alumina Refinery, a key supplier of the material to the Russian company’s Siberian smelters, according to Ukraine’s anti-trust watchdog. 
Rusal was sanctioned by Ukraine and couldn’t fully control the refinery, while Glencore won’t be subject to such curbs, according to watchdog, which approved the deal.
Glencore won a prized oil supply contract with Rosneft PJSC last year in a similar fashion. In that deal, it helped the Russian government narrow its budget deficit by agreeing with Qatar’s sovereign wealth fund to buy an $11bn stake in the oil producer.
The firm’s interest in Rusal goes back to at least 2007, when Deripaska and fellow billionaire Viktor Vekselberg merged their companies with Glencore’s alumina plants. In the years before Glencore went public in 2011 and was forced to drop some of its aura of secrecy, the only known picture of Glasenberg was of him visiting a smelter in Siberia.
The agreement announced on Wednesday gives Glencore exposure to a larger business that integrates both Rusal’s aluminium assets with power stations supplying the electricity needed to produce metal. Glencore will also have a presence on the board of En+, which will increase its stake in Rusal to 57% from 48% following the swap.
A logical step would be for Deripaska to consolidate his control of Rusal, Oleg Petropavlovskiy, an analyst at BCS Global Markets, said by phone.
Still, Vekselberg and fellow Rusal shareholder Mikhail Prokhorov would be unlikely to accept Deripaska’s valuation of En+’s power assets, people familiar with the matter said. 
En+ has been said to seek a valuation of about $8bn to $9bn. VTB Capital, which is working on the IPO, valued the group’s power assets at $3.5bn to $5.5bn, according to a report seen by Bloomberg News.
“This is too much,” Vladimir Sklyar, an analyst at Renaissance Capital, said by phone. He said that the valuation implies a bigger earnings multiple than other Russian and overseas power companies.
In addition, neither Vekselberg nor Prokhorov are willing to reduce their exposure to MMC Norilsk Nickel PJSC, in which Rusal holds a stake of about 28%, those familiar with the matter said. The two shareholders hoped either for a spin-off of Nornickel’s stake, or that it would be sold at some point, the people said.
Peter Grauer, the chairman of Bloomberg LP, is a senior independent non-executive director at Glencore.


Glencore headquarters in Baar, Switzerland. Glencore’s decision to reshuffle its Russian aluminium investment is cementing a relationship with an old companion that 
underpins its position as the world’s top trader of the metal.