Polymetal to raise £518m in London IPO

RUSSIAN gold and silver miner Polymetal loosened the conditions on its share swap plan yesterday to push through its bid to raise more than £500m on the London Stock Exchange.

Polymetal, the world’s third-largest silver producer and currently part-controlled by tycoon Alexander Mamut (pictured), said it would price its flotation at between 910p and 1,035p per share, issuing new shares to raise between £450m and £518m as early as next month.

But it said only 83 per cent of investors in its Moscow-listed shares and UK-listed global depositary receipts had accepted its offer to swap their stock for shares in a new, London listed entity – short of the 85 per cent of acceptances needed to complete the swap.

To give investors more time, Polymetal has set a two-day extension until 26 October for them to accept the offer, but it also said it had abandoned the 85 per cent threshold.

“Due to certain complexities of the acceptance under the ISSF, some Polymetal shareholders and GDR holders have not been able to accept the ISSF prior to the expiration time, ” it said in a statement.

The group’s chief executive, Vitaly Nesis, said he believed the deal “offers substantial benefits to existing shareholders of Polymetal, providing significantly improved trading and liquidity as well as strong growth prospects, which we expect will provide substantial value going forward.”

The share swap will see Polymetal delist from Moscow and issue new shares in a Jersey-headquartered holding company. It hopes to be included in the FTSE 100 index within months of listing in London.

The miner listed about 25 per cent of its shares in Russia and via London GDRs in 2007 and aims to add another 25 per cent of free float in this IPO to give it the 50 per cent required by London’s listing rules.

Polymetal follows a series of other Russian corporates in seeking a London listing and FTSE inclusion, despite the onerous governance guidelines, to access the deeper capital and notice of global investors.

Earlier this month, steelmaker Evraz also said it would to move to a main market listing to access the more liquid capital market.

ADVISER: HSBC

SERGEI CHINKIS
HSBC

SERGEI Chinkis is leading the HSBC team advising Polymetal on its share swap and IPO on London’s main market. A veteran of emerging markets mining deals, Chinkis worked for Bank of Montreal, and joined BMO Nesbitt Burns in 2004 as a director in its metals and mining division, prior to moving to HSBC.

Chinkis has advised on M&A and fundraisings, including the $9bn reverse takeover of Kazakh Gold by Russia’s biggest gold miner Polyus Gold this year. He was also part of the team that planned Danish services group ISS’s aborted IPO last year, pulled by its private equity owners.

In 2002 he helped Canada’s Franco-Nevada and Normandy Mining merge with Newmont Mining to create the world’s biggest gold company. He holds an MBA from Simon Fraser University and a degree in oil and gas engineering from Moscow State Academy of Oil and Gas.