Russia’s largest gold producer and one of the top ten gold miners in the world, Polyus PJSC (MCX:$PLZL), is now selling shares worth at least $700 million. This is due to the fact that Moscow Exchange requires more freely traded shares from companies in order for them to obtain a primary listing. Currently, only about 7% of Polyus’ shares are accessible on the Russian market.
Around 7% ownership of the company will be given through a mix of new and existing shares owned by the family of billionaire Suleiman Kerimov. Other shares will be traded on the London Stock Exchange as global depository receipts — a first since Polyus withdrew its listing two years ago. Polyus Gold International Ltd., the parent company of Polyus, delisted from the Exchange in late 2015 when the Kerimov family bought up the company’s shares as an effort to make the company remain within Russia specifically.
Many Russian companies have delisted from international markets in recent years due to various reasons such as sanctions, low commodity prices, and government ensuring that listings will be moved to Moscow. CEO of Polyus, Pavel Grachev, commented on the company’s return to London, stating, “We don’t see any real alternative for Russian players as a platform for additional listing despite the fact there are other potential exchanges like Toronto or Hong Kong. London Stock Exchange will definitely remain the main platform after Moscow Exchange.”
George Buzhenitsa, an analyst at Deutsche Bank AG, is both excited and concerned about the company’s return to the London Stock Exchange. Buzhenitsa notes, “Polyus really has top-quality assets, which is good for the deal. The only thing is that investors will remember the parent company’s past history in delisting.”
Despite skepticism, investors would no doubt be making gold investments in Polyus. Just today, a statement was released citing the company to have about 71 million ounces of proved and probable gold reserves — second to the world’s largest mining company, Barrick Gold Corp (TSE:$ABX). This year so far, capital expenditures for the company were at $781 million, and on Monday they declared a $354 million dividend.
The Price range of the shares is to be announced sometime around June 16, and the deal should be closing at the end of the month, according to some people — who have asked not to be identified — with knowledge of the company’s plans. Depending on demand and price, the share sale could increase. Polyus expects to gain around $400 million in proceeds.
Investors should note that Goldman Sachs Group Inc. (NYSE:$GS), JPMorgan Chase & Co. (NYSE:$JPM), Sberbank PJSC, VTB Capital, BMO Capital Markets (TSE:$BMO), Gazprombank PJSC, and Morgan Stanley (NYSE:$MS) are organizing the deal.
On a separate note, the Kerimov family agreed to sell 10% of its ownership in Polyus to China’s Fosun International Ltd. (HKG:$0656) A Kremlin-backed Russian Direct Investment Fund bought 0.3% of Polyus last week.
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