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The company has not been listed on the exchange since 2015, and experts believe its decision to go back could prompt other Russian companies to return as well.
Russian gold miner Polyus (OTCMKTS:OPYGY,MCX:PLZL) delisted from the London Stock Exchange in 2015, but is now planning to return.
The company, which currently trades only on the Moscow Exchange and the OTC Market, announced earlier this month that it plans to raise $400 million in primary proceeds by offering between 7 and 9 percent of its shares in London. Polyus has said each share will be priced between $66.50 and $70.60.
According to the Financial Times, those numbers would value Polyus at as much as $9 billion on a pre-money, fully diluted basis, including treasury shares. The company was the ninth-largest gold-producing company last year with output of 61.2 tonnes, stats from Thomson Reuters GFMS show. Its goal is to become the fourth largest by 2019.
Chart via Thomson Reuters GFMS.
Polyus delisted from the London Stock Exchange to ensure that it would be eligible to bid for the Sukhoi Log deposit, one of the largest undeveloped gold deposits in the world. The Russian government awarded the license for the deposit to a joint venture between Polyus and Russian state-owned corporation Rostec a few months ago.
Reuters says that western sanctions over Russia’s role in the Ukraine crisis also played a role in Polyus’ delisting, and has suggested that Russia’s current relationship with the west could complicate the offering. “It is not the best moment for the placement, of course. It could significantly complicate the placement,” the news outlet quotes Kirill Chuyko of BCS Investment Bank as saying.
Other experts have noted that Polyus’ return to the London Stock Exchange comes on the back of a recovery in the Russian economy. The country is now coming out of a two-year recession, MarketWatch notes, and the World Bank is calling for a growth rate of between 1.3 and 1.4 percent for the 2017-to-2019 period. If Polyus’ offering receives a positive response, it is possible that other Russian companies will return to the exchange.
Primary proceeds from Polyus’ offering will be put toward debt repayments and new development projects. The company also recently raised $500 million and $800 million through Eurobond placements, and agreed to sell 10 percent of its shares to a Chinese group led by Fosun International (HKEX:0656). Fosun also has the option to buy a further 5-percent stake in Polyus.
Opinions differ on whether the proposed share price range of $66.50 and $70.60 is reasonable. While Vadim Kotikov, an analyst at Uralsib, told Reuters that “the upper end … coincides with the price of the previously announced deal with Fosun,” Bloomberg points out that higher price was about a 9-percent discount to Polyus’ closing share price in Moscow on June 14, the day before pricing was announced.
Final pricing of the offering is expected on June 30.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.