The IST Group, the largest shareholder of Polymetal, unexpectedly sold its stake to an investment fund from Oman. Kommersant’s sources believe that the deal may, in turn, be part of an operation to sell Polymetal’s Russian assets. Polymetal’s management insisted on their sale in full and without a significant discount, which did not suit potential Russian buyers. Now, a possible option would be for the assets to be bought out by the structures of the former shareholder.
The exit of Alexander Nesis’ IST Group from Polymetal International plc, the second-largest gold producer in Russia, opens the way for the spin-off of Russian assets from the company and their sale, Kommersant’s sources in the industry believe.
On January 29, Polymetal reported that Mercury Investments International (MII LLC), a structure of the state investment fund of Oman, is buying IST’s 23.9% stake.
The amount of the deal has not been disclosed, but on the Astana stock exchange, such a package is worth about $554 million at current quotes. Konstantin Yanakov, a representative of the IST Group, has left the board of directors of Polymetal. At the same time, the head of the company Vitaly Nesis, brother of the company’s founder Alexander Nesis, as stated by Polymetal, will remain in his post.
“We are pleased that MII LLC has confirmed its full support for Polymetal’s strategy, which includes reducing risks for the business by selling Russian assets and further developing production in Kazakhstan and the Central Asian region as a whole,” Vitaly Nesis commented on the deal.
In August 2023, Mr. Nesis said that the company intends to sell Russian assets within six to nine months. The condition of the deal was the complete sale of all assets, and not in parts. The sale is a forced measure for the group due to the risk of sanctions: in May 2023, the Russian legal entity Polymetal JSC fell under US sanctions, but they did not affect the entire Polymetal International group. In August, Polymetal re-registered from Jersey to Kazakhstan, while the company’s shares are also traded on the Moscow Exchange.
In September 2023, Vitaly Nesis said that he did not expect “catastrophic discounts” when selling the Russian business, but the price would be lower than historical multiples.
According to the AIX exchange in Astana, since January 2022, Polymetal International shares have fallen fourfold, to $4.62 per share, and on the Moscow Exchange in rubles – 2.4 times, to 500.6 rubles.
Analysts from My Investments wrote in their Telegram channel that shares on the Moscow Exchange are traded with a premium to securities on the AIX, which is “fundamentally unfounded”.
Many investors were interested in Polymetal’s Russian assets. According to Kommersant, they included all the major players in the industry: Polyus, Vladislav Sviblov’s structures, UGMK, Seligdar, as well as Roman Abramovich’s former partner in Sibneft and Highland Gold, Ivan Kulakov. However, as Kommersant’s sources in the industry say, none of them currently have any serious interest in acquiring all the assets in the Russian Federation: the “everything, at once and at a high price” conditions set by top management do not suit them. In this case, it is possible, the sources suggest, that the Russian business will be bought out by structures associated with IST. Apart from the IST Group, no one needs the full package of Russian assets, according to a Kommersant source familiar with the situation. The IST Group declined to comment on Kommersant’s question regarding the possible purchase of Polymetal’s Russian assets. “We do not see any significant risks for the company itself after the change of shareholder, since the sale will not affect the operating and financial indicators,” comments Dmitry Smolin from the investment bank “Sinara”.
At the same time, the exit of the main shareholder in the current situation is a certain negative signal for minority shareholders. “For the latter, this deal will most likely bring another delay in the sale of the Russian business and the payment of dividends, since the new shareholder may need time to develop a new strategy,” he believes.
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Ilya Zharsky, Managing Partner of the Veta expert group, believes that the proposed deal to sell Polymetal’s Russian assets should not be subject to the de jure requirement to apply a discount: the company has moved to Kazakhstan, IST is no longer participating in the capital, and its place has been taken by a structure whose ultimate beneficiaries come from friendly Oman. At the same time, the Omani company owns only 23.9%, while 75.2% of the shares are in free circulation, and their owners, in addition to management (3.3%), include the American investment company BlackRock (9.9%) and Fodina B.V. (3.3%), owned by the heirs of the Czech businessman Petr Kellner.
01/31/2024