Russia's largest gold miner Polyus Gold held its SPO on Moscow Exchange at $66.5 per ordinary share, the company said on June 30.

RBC business portal confirmed the same day that an SPO of 10% of its shares worth $800mn took place. Unnamed sources told RBC that the deal was facing tough market conditions and was a hard sell with international investors.

Investors surveyed by RBC said they decided not to participate in the deal, seeing the price offer as too high, especially given the comparatively low dividend payment policy compared with other Russian metallurgy majors.

Other investors noted that the investment climate in Russia deteriorated since the equity deal wave of the beginning of 2017 that saw successful offerings of Detsky Mir, PhosAgro, and Etalon.

In particular, the prolongation of the sanctions and the "large lawsuit between well-known corporations" is to blame, RBC reported, referring to the controversial lawsuit of Rosneft oil company and Sistema investment conglomerate.

Nevertheless, Polyus said over 80 institutional investors participated in the offering, with 10 largest buying 60% of the shares proposed. Long-term investors accounted for 80% of total demand.

About half of the shares proposed for the offering are subscribed for by UK investors, with Russian investors accounting for about 10%, and the same amount in the Middle East and Europe, as well as 20% for North American investors.

"Polyus looks very attractive on the background of finalising the SPO," BCS Equity commented on June 30, estimating that the free float of the company increased to 15.5% and 16.4% including the option that went with the offering.

The company is in the top-8 global gold miners with 71mn ounces of JORC-classification reserves and potential to increase output from below 2mn ounces in 2016 to over 2.7mn ounces by 2020, and even further given the exploration of the Sukhoi Log mine, BCS notes.

Another positive trigger for the stock could be MSCI index inclusion in November, should the organisers of the offering use the option to increase the freefloat and Polyus share price not lose more than 10% of the SPO price.

In February, Moody's Investors Service maintained a Negative outlook for the 'Ba1' rating of Polyus Gold.

This was due to the "risk of capex overruns at Polyus Gold's development projects and heightened shareholder distributions, which could drive its free cash flow to a negative territory", Moody's said, as well as "the lack of track record of the company adhering to the anticipated balanced financial policy, following the debt-financed share buyback in 2016".

According to the company's latest IFRS report, the net debt of Polyus Gold as of end of 2016 jumped to $3.24bn from $364mn at the end of 2015, due to its share buyout programme.