Russian potash producer Uralkali announced Oct. 19 that Morgan Stanley Capital International (MSCI) index provider has made a decision to exclude the company’s shares from MSCI Global Standard Indexes Russia, effective from Oct. 21, 2015.
The decision comes after the proportion of Uralkali’s outstanding shares available for purchase by international investors fell below the required threshold after a stock buyback by the company, which was completed Sept. 25. The potash producer repurchased 22 percent of its shares, including a 12.5 percent stake held by China’s Chengdong Investment Corp. The $2-billion buyback reduced the ‘free float’ to approximately 13.9 percent of Uralkali’s share capital, the potash producer said Oct. 16. This latest stock repurchase follows another buyback of around $1 billion in June.
It is understood that passively-managed funds that track the MSCI indexes are forced to sell Uralkali shares once the company is dropped from the index. Bloomberg Business quoted Russia’s VTB Capital as saying the exclusion from the MSCI index could drive as much as $30-$35 million of investment away from the stock.
Uralkali in August warned the reduction in the free float may also lead to a de-listing of its shares from the London and Moscow stock exchanges.