* En+ sees its market cap at up to $8.5 bln on pre-money basis
* Sets price range at $14-17 per GDR
* To place shares in London and Moscow (Adds details, background)
By Anastasia Lyrchikova and Olga Popova
MOSCOW, Oct 23 (Reuters) - Russia's En+ Group, which manages tycoon Oleg Deripaska's aluminium and hydropower businesses, has set a price range for a planned stock market flotation that will test investor appetite for Russian assets three years after the Ukraine crisis.
En+ expects to raise a total of $1.5 bln through the IPO and plans to use the bulk of the proceeds to cut debt, in particular, to the state bank VTB.
The initial public offering (IPO), to be carried out in London and Moscow, will be the first major float of a Russian company in London since 2014, when Russia's annexation of Ukraine's Crimea region provoked western sanctions.
It could also provide a boost to London's IPO pipeline, which has slowed following Britain's vote to leave the European Union.
En+ acknowledged the political issues it faces. "The sanctions package may have a material adverse effect on the Russian financial markets and investment climate and the Russian economy generally and could, in particular, materially adversely affect the group’s business, results of operations, financial position and prospects," it said in its IPO prospectus.
The price range was set at between $14 and $17 per Global Depositary Receipt (GDR), with the company's stock market value expected in a range of $7 billion to $8.5 billion on a "pre-money" basis, ignoring cash raised in the IPO. En+ said it expects to set the final sale price on Nov. 3.
The offering will represent 15.8 to 18.8 percent of En+'s issued share capital excluding an over-allotment option.
En+ owns assets in metals and energy, including a 48 percent stake in Hong Kong-listed aluminium producer Rusal, which is a big consumer of hydroelectricity produced by companies owned by En+.
En+ said in early October it aimed to raise $1.5 billion from its IPO and the intention of Singapore's AnAn Group, a strategic partner of China's CEFC, to purchase GDRs during the deal for $500 million.
Since then, En+ also approved an interim dividend of $125 million to be paid in December and agreed a swap deal with Glencore, another shareholder of Rusal.
Glencore will swap its 8.75 percent stake in Rusal for shares in En+ after the IPO. En+'s stake in Rusal will rise to 56.88 percent as a result of the conversion.
The IPO comes as prices for aluminium have risen 28 percent on the London Metal Exchange so far this year. On Monday, Rusal said its aluminium production rose 1.1 percent in the third quarter from the previous three months.
Rusal shares are up around 60 percent since the start of 2017, and En+'s 48 percent stake in the company has a market value of almost $5 billion, according to Reuters data.
Shares in Rusal came under pressure earlier in October after two of its other shareholders - tycoons Mikhail Prokhorov and Viktor Vekselberg - sold a 3 percent stake in the company for $315 million.
Glencore's upcoming stake swap with En+ also put pressure on shares of Rusal, which said in a statement on Friday that the swap would not result in any changes to its public status. (Additional reporting by Gabrielle Tetrault-Farber in Moscow and Dasha Afanasyeva in London; Writing by Polina Devitt and Katya Golubkova; Editing by Jason Neely and David Holmes)