Russia's Polyus Gold sold 3.8% SPO for $400mn

Russia's Polyus Gold sold 3.8% SPO for $400mn
Russia's largest gold producer Polyus Gold is one of the biggest gold producers in the world and plans a $400mn SPO of 3.5% stake / wiki
By bne IntelliNews April 4, 2019

Russia's largest gold producer Polyus Gold sold a 3.84% stake in an accelerated book-building for an SPO of on the Moscow Exchange, raising $390mn, the company said in a statement on April 4.

Russia’s equity market is slowly coming back to life. Since the beginning of 2019 there have been a number of equity deals carried out on Russian stock market, after a desert of no deals since August 2018. 

“[The company] has successfully sold approximately 5.13mn ordinary shares in the form of Global Depositary Shares (“GDSs”) and ordinary shares of the company,” the statement says. “The sale, carried out by way of an accelerated bookbuild, was priced at $38 per GDS corresponding to a price of $76 per ordinary share, with two GDSs representing an interest in one ordinary share.”

This included sales of equity in Norilsk Nickel and Evraz by oligarch Roman Abramovich and Alexander Abramov, the sale of minority stake in the TCS banking Group by its owner Oleg Tinkov that owns Russia’s only fully online bank Tinkoff bank, preparation of a SPO by meat major Cherkizovo, and a possible IPO of Russian rail operator RusTransCom that was announced last week.

Polyus Gold shares have ridden the wave of rising demand from investors that are back in “risk on” mode. The SPO sold a stake that was part of the 82.44% portfolio held by the holding company Polyus Gold International, controlled by Said Kerimov, the son of billionaire and senator Suleiman Kerimov.

The deal increases the company’s freefloat from 16.67% to 20.51%. The majority owners retain a stake of 78.6%. The company will not receive the proceeds from the sale, Polyus said.

Goldman Sachs International, Bank GPB International S.A., J.P. Morgan Securities plc, Sberbank CIB (UK) Limited and VTB Capital plc acted as joint global coordinators and bookrunners for the placing. The majority shareholders have agreed to a 60 days lock-up with regard to any new GDR sales.

After nearly five-years of being moribund, investors are becoming increasingly interested in Russian equities as while the overall index has remained flat, the crises and sanctions have catalysed a consolidation in many sectors and individual corporates have flourished as they increase their market share. At the same time Russian companies are paying the highest dividend yields in the world – at least twice the level of the average dividend yield paid by companies included in the benchmark MSCI EM index.

Reportedly Russian Fund for Direct Investment (RDFI) along with a number of Middle Eastern Funds will participate in the offering. Analysts and investment bankers surveyed by Vedomosti daily believe that prolonged indecision over sanctions and growing gold prices will support Polyus shares. Since October 2018 the company’s shares gained 30%.

Polyus Gold has been showing stable financial results in the third and fourth quarters of 2018 and is investing in developing two massive gold deposits Sukhoi Log and Natalka, making it one of the biggest gold producers in the world.