MOSCOW (Reuters) – Russia’s largest gold firm Polyus Gold (PLGLq.L) is likely to go ahead with a share sale worth between $700 million (437 million pounds) and $1 billion (625 million pounds) in late April, paving the way for a premium listing on the London Stock Exchange, two sources familiar with the matter said.
Polyus is worth about $10 billion and sits on potentially lucrative gold reserves in Russia’s far east, and oligarch stakeholder Mikhail Prokhorov has said he wants to merge the company with an international player.
A premium listing would create a more liquid acquisition currency for Polyus to pursue deals, but the long-awaited London move has been complicated by Russian election politics and laws that treat the gold sector as strategic.
Polyus, in which billionaire Suleiman Kerimov is also a shareholder, had aimed to gain a FTSE 100 index spot by redomiciling from its Jersey home to London and selling stock.
That move has not received the approval needed from a committee chaired by Prime Minister Vladimir Putin, who was re-elected to the presidency on March 4, in a contest where Prokhorov, running on a liberal ticket, ran a respectable third.
Earlier in March, Polyus withdrew its application to create a new parent company, considered necessary for it to relocate to London. Redomiciling would have allowed Polyus to be eligible to join the FTSE 100 by raising its free float to 25 percent, rather than the 50 percent minimum needed for a Jersey company.
Polyus’ aims for FTSE inclusion and a London premium listing had been seen as the first step to securing a large-scale merger deal. A source familiar with its plans to raise its profile in London said recently that the rest of Polyus’ plans had not changed, suggesting its ambition to do a large deal may still be in place.
There has been speculation Polyus is keen to do a deal with rival Polymetal (POLYP.L). Discussions over such a move have taken place at the shareholder level, two sources familiar with the matter previously told Reuters.
Both firms have denied they are in talks about a deal.
A move to the FTSE would follow similar moves by Evraz (EVRE.L), part-owned by Chelsea Football Club’s Roman Abramovich, and Polymetal, part-owned by tycoons Alexander Nesis and Alexander Mamut with Czech investor PPF, which recently became premium-listed FTSE 100 stocks.
Gaining FTSE 100 entry typically boosts demand for a company’s shares, as many institutional funds automatically buy into its members. Polyus’ London-listed GDRs gained 3 percent on Friday, rising to $3.07.
Currently traded in London via global depositary receipts (GDRs), Polyus may sell up to 10.5 percent of its shares to hit the 25 percent level, enabling it to reduce its $500 million short-term debt, one of the sources said.
The source said Polyus was likely to sell the 7.5 percent it holds in treasury but may place up to 10.5 percent, with existing shareholders reducing their holdings accordingly, to meet listing requirements.
A share launch, likely in the last week of April, would probably be in the form of a placement with strategic investors rather than a secondary public offering, the second source said.
Moving ahead with the plans in April would allow investors to first view Polyus’ financial results. Polyus has not yet announced a release date for its 2011 earnings. The company declined to comment.