MOSCOW (Reuters) - Libya is among the main backers of Russian aluminium giant UC RUSAL's $2.2 billion stock float in Hong Kong , sources close to the listing said on Tuesday, as Tripoli looks further afield to invest its oil wealth.
Libya's $65 billion sovereign wealth fund has bought a stake of around 1 percent in UC RUSAL, the sources said.
The two sides had agreed to explore construction of an energy and aluminium complex in Libya before the financial crisis hit in late 2008.
While Libya's support for an IPO that was also heavily backed by the Russian state hints at growing ties between the two countries, the sources said the investment was in keeping with Libya's recent advances abroad into European markets.
"It's a big IPO with a big quasi-political component," one source close to the offering said, on condition of anonymity.
UC RUSAL shares are due to start trading on Wednesday after the world's largest aluminium producer secured enough support for a listing crucial to its repayment of debts approaching $15 billion.
The IPO was backed by Russian state bank VEB, which is buying a stake of over 3 percent, and cornerstone investors that include Nathaniel Rothschild's company, U.S. hedge fund Paulson & Co and Malaysian-Chinese businessman Robert Kuok Hock Nien.
One source close to the offering said the Libyan Investment Authority invested $200 million in the UC RUSAL IPO, which would give it a stake of almost 1 percent. Business daily Vedomosti said the amount was $300 million, giving it a 1.4 percent share.
Libya's sovereign wealth fund, set up in 2006 to manage the country's surplus oil revenues, is Africa's biggest such fund and to date has invested mostly in European countries.
Its investments include stakes in Austrian firm Wienerberger, the world's largest brick maker, and Italian bank UniCredit.
Libyan leader Muammar Gaddafi visited Moscow in October 2008 for the first time in 23 years, pitching his tent inside the Kremlin walls. Civilian nuclear projects were among the subjects discussed, officials said at the time.
Russian media reported three months later that the opening of a naval base in the Libyan port of Benghazi was also among the subjects discussed during Gaddafi's visit to Moscow.
Major General Abu-Bakr Yunis Jabr, Libya's defence minister, was flying into Moscow on Tuesday, officials in Libya's Moscow embassy said, without giving details. Russian media said a $2 billion defence contract could be signed.
Analysts said, however, that this was not linked to RUSAL.
"There are no sanctions against Libya, so Russia would not have to resort to any complex schemes in order to sell arms," said Moscow-based defence sector analyst Alexander Golts.
UC RUSAL and the Libyan Investment Authority have long been in contact. British daily The Times reported in September 2009 that RUSAL held talks on the possibility of selling a 10 percent stake, though ultimately no deal was done.
UC RUSAL also signed a memorandum of understanding in September 2008 to create a joint venture to build an "energy and metals complex" in the North African country.
UC RUSAL would have a 60 percent interest and the Libyan partner 40 percent in a venture to construct an aluminium smelter with annual capacity of 600,000 tonnes, the Russian company said in a statement issued at the time.
No progress on the project has since been reported. UC RUSAL declined to comment on the matter.
"RUSAL is putting every cent it can into Siberia and Guinea," said the first source. "Libya does have cheap power, but it's got no alumina. It's not an obvious place for RUSAL."