Gold-related groups might bring markets to life

 
David Hellier
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GOLD has been one of the few winners of the recent downturn because of its safe haven status, so it should come as no surprise that companies involved in the production of the precious metal should be first in the queue to bring a ray of sunshine to the nearly dormant new issues markets.

Polymetal, a Russian gold and silver miner, is seeking a London listing that could take it into the FTSE 100 before Christmas if all goes to plan.

Its Moscow-listed shares are currently almost half-owned by three groups of shareholders, including Alexander Mamut, the Russian tycoon that bought Waterstone’s earlier in the year. They have agreed to convert their GDRs and Russian shares into London equity.

But unlike ENRC, which has a free float of only 18 per cent, Polymetal and its advisers aim to have 50 per cent of its shares freely floated, which will at least ease the corporate governance fears – as will the appointment of former AngloGold Ashanti chief executive Bobby Godsell as chairman.

Polymetal’s sole financial adviser is HSBC, a bank that has picked up a lot of IPO work in Hong Kong and Singapore – Samsonite, Hiuxian Real Estate and Sunart being three recent big deals it has advised on – but little comparable in Europe.

HSBC, whose team in this case is led by Sergei Chinkis, was a book-runner on the ISS flotation in Denmark, which was pulled, but otherwise it is yet to truly make its presence felt despite a strong research and sales effort. Other advisers include Morgan Stanley, Deutsche Bank, which has had a long relationship with Polymetal, VTB Capital and Collins Stewart.

The redomiciling of Polymetal is likely to be followed some weeks later by the premium listing of Polyus Gold, Russia’s top gold producer, in a deal run by global co-ordinators Bank of America Merrill Lynch and JP Morgan.

Polyus Gold, which HSBC also advised, plays down fears the two groups will be basically after the same market in terms of funds. “Polymetal will be long gone by the time we are around,” said one adviser yesterday.

The sadness is that solid UK companies find it virtually impossible to come to market at the moment, whereas resource-backed groups from Russia or Switzerland, such as Glencore, find it worth the candle to attempt listings or similar.

No wonder Russian groups fancy the challenge of listing here, no matter how dire current market conditions are.

Russia ranks 123rd in the world in the World Bank’s Ease of Doing Business Index, after Uganda and Ethiopia.
david.hellier@cityam.com