Polyus offers 9% of its share capital for $879-million

David McHutchon | June 30, 2017 | Views: 111

Polyus, Russia’s largest goldproducer, has sold 9% of its shares in an offering in Moscow and London, at the low end of a previously set range, the company said on Friday.

British investors bought about half of the share offering, VTB Capital, a bookrunner on the deal, said in a separate statement. The share of investors from North America totalled around 20% of the deal.

Polyus, controlled by the family of Russian tycoon Suleiman Kerimov, delisted from the LSE in 2015 after Western sanctions over Moscow’s role in the Ukraine crisis began to bite for Russian companies.

It returns to London, buoyed by an 8% rise in global goldprices this year and by a separate $887 million deal to sell 10 percent of the company to a Chinese consortium led by Fosun International.

The offer price has been set at $33.25 per global depositary receipt (GDS), corresponding to a price of $66.50 per ordinary share, at the lower end of a previously announced range.

The total size the offering is $879-million, including the over-allotment option, or $799-million, excluding it.

Half of the proceeds from the deal went to Polyus and would be used for general corporate purposes, CEO Pavel Grachev told an event at the Moscow Exchange, while announcing the deal. The other half went to the Kerimov family.

Russian, European and Middle Eastern investors each took about 10% of the offering, Boris Kvasov, the head of equity capital markets at VTB Capital, was quoted as saying in the statement.

Long-term investors took about 80% of the total allocation, including sovereign funds. Russian pension funds took less than 1%, Kvasov added.

“The quality of investors, not only the fact of the placement itself, was important to Polyus,” Grachev said.

A consortium formed of the Russian Direct Investment Fund(RDIF) with Middle-Eastern Sovereign Wealth Fundsparticipated in the deal. It included investors from the UAE, Qatar, Kuwait and Bahrain.

Appetite for Russian assets has been strengthening since the start of this year, driven by a rising oil price and expectations that US President Donald Trump would ease fraught US-Russian relations.

“We see sufficient interest towards the Russian risk and equity in general from foreign institutional investors,” Kvasov told the Moscow Exchange event. “I hope that this deal will not be the last one this year. We see a window for further potential placements this year.”

Anton Malkov, head of equity capital markets at SberbankCIB, said further Russian deals were possible in the market in the autumn if oil markets and geopolitics remained calm.

Market optimism has been tempered in the past few weeks, with Trump embroiled in a row at home over his associates’ ties to Russia, and the United States imposing a fresh round of sanctions on some Russian entities.

However, Polyus is a pure producer of gold, considered a safe haven during times of political and financial uncertainty.




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