RUSSIAN steel company Severstal yesterday announced plans to float its Nord Gold unit in London to raise more than $1bn (£629m). It values the company at over $4bn.
The premium listing of at least 25 per cent of the gold miner is set to be the biggest mining float since Nate Rothschild’s $1bn offering of investment shell Vallar last year.
Several reports said Severstal’s subsidiary would start trading in mid-February, but would not join the FTSE index due to its base in the Netherlands.
The announcement makes it the fourth Russian company to announce plans to launch in London in the past week, following in the footsteps of steel pipe maker ChelPipe, pump manufacturer HMS Hydraulic and coking coal producer KOKS.
Analysts have said Russian private issuers could raise up to $30bn this year in favourable market conditions. After two barren years, new share issues rebounded in 2010 with companies raising around $5.5bn.
Nord Gold focuses on gold mines in emerging markets including Kazakhstan, Russia and West Africa.
It hopes to produce 1m ounces of gold by 2013 through existing mines and acquisitions, up from 589,000 ounces in 2010.
Philip Baum, Nord Gold’s chairman and veteran of Anglo American, said: “We will strive to ensure that investors benefit from attractive earnings growth whilst protected by the highest standards of corporate governance, consistent with a UK premium listed company.”
Severstal’s shares rose 3.9 per cent to $19.79 in Moscow trading yesterday.
“Nord Gold accounts for much of Severstal’s $19bn capitalisation, and the unit’s IPO will keep positively affecting Severstal’s stock the closer it gets to the day of the public offering,” said Maxim Semenovykh, metals analyst at Alfa-Bank.
News of Severstal’s plans comes after the flotation of African Barrick Gold (ABG) in 2010 by its parent Barrick Gold, the world’s largest gold miner.ABG raised over £500m from selling off a quarter of the company.
Several other mining companies are in the process of coming to market. Privately held commodity trader Glencore, itself said to be preparing to float later this year in either London or Hong Kong, plans to spin off or list its Kazzinc gold unit in 2011.
MORGAN Stanley is sole sponsor of the Nord Gold float, with Credit Suisse, Russian bank Troika Dialog and Morgan Stanley acting as joint bookrunners. Cannacord Genuity is acting as co-manager.
Morgan Stanley’s co-head of investment banking in Russia, Gergely Voros, and executive director Vladimir Samarin head the team.
Voros has been with Morgan Stanley’s London office since 1998, taking up his new role in April 2010. Before MS, he worked in Munich as a consultant for Boston Consulting Group and gained an MBA from Harvard Business School.
Voros has been involved in numerous capital raisings including the partial float of Russia’s state-owned Rosneft (currently in the headlines for its work with BP), Vimetco and ENRC.
Samarin worked for Bank of America, McDonald Investments and the Barrington Consulting Group before joining Morgan Stanley.
At Credit Suisse, Nicholas Koemtzopoulos, Laurent Charbonnier and Chris Byrne lead the team.
Charbonnier joined the bank in 2008 from UBS, and is a director on the metals and mining team.
Koemtzopoulos is responsible for equity capital markets in Russia and central and eastern Europe.