China Development Bank may finance Fosun's Polyus deal - sources
19/04/2017 13:30
By Polina Devitt and Julie Zhu
MOSCOW/HONG KONG, April 19 (Reuters) - China Development
Bank is considering providing financing for a Chinese consortium
seeking to buy a stake in Russia's largest gold producer Polyus
PLZL.MM , two sources familiar with discussions about the
potential deal told Reuters.
The consortium, led by Fosun International Ltd 0656.HK ,
one of China's most acquisitive conglomerates, has since last
year been in talks to buy a stake in Polyus, controlled by the
family of Russian tycoon Suleiman Kerimov. urn:newsml:reuters.com:*:nL4N1D41CN
According to one of the sources, the Chinese buyer is also
discussing the financing with a few other banks, but the source
did not identify them.
The plan under discussion is to sell "well below" a 25
percent stake in Polyus to the Fosun-led consortium, with a
potential option to increase the stake later, said one of the
sources, who spoke on condition of anonymity. Polyus has a
market value of about $10 billion.
Russia has been actively looking for investments in Asia,
mainly in China, since the West imposed sanctions on Moscow due
to its role in the Ukraine crisis and the annexation of
Ukraine's Crimea peninsula in 2014.
China is the world's top consumer, producer and importer of
gold and Chinese companies have been targeting gold mine
acquisitions. urn:newsml:reuters.com:*:nL2N1HD0O5
Discussions on the deal are still underway and there is no
firm deadline, according to one of the sources familiar with the
discussions, and a third source also familiar with the
discussions.
Two of Fosun's Chinese affiliates - Zhaojin Mining 1818.HK
and Hainan Mining 601969.SS - may join the consortium, the
same two sources said.
Fosun and Polyus declined to comment. Reuters's telephone
calls to China Development Bank's office in Beijing went
unanswered. Zhaojin and Hainan did not answer Reuters's emailed
requests for comment.
Polyus is a potentially attractive target because global
gold prices XAU= have risen 11 percent so far in 2017, and
Polyus this year acquired the giant Sukhoi Log gold deposit in
Russia. urn:newsml:reuters.com:*:nL5N1FG23A
Russian First Deputy Prime Minister Igor Shuvalov said on
April 12 that Fosun planned to sign an agreement to buy a stake
in Polyus. urn:newsml:reuters.com:*:nR4N1HJ00M
Russian officials are keen to have the deal ready for when
Russian President Vladimir Putin visits China in May, one of the
sources familiar with the situation said. urn:newsml:reuters.com:*:nR4N1FO012
SPO IN LONDON AND MOSCOW
Polyus is also considering launching a secondary share
offering (SPO) in London and Moscow in May or June, several
sources familiar with planning for the listing said.
The deal will take about one month, including pre-marketing
and road-show, but the size of the offer is still under
discussion, two of the sources said.
The Polyus SPO does not directly depend on the Fosun deal
and Polyus is not in a hurry to do it, but the listing will go
ahead anyway, one of the sources familiar with the planning for
the offering said.
The aim is to carry out a successful listing with major
investors, the source said. "The timing is not crucial to them.
The situation is far better than it was three years ago, and
everyone is satisfied with the price of gold."
Western investors, which steered clear of Russian assets
after the 2014 annexation of Ukraine's Crimea, are now making a
cautious return to Russia. urn:newsml:reuters.com:*:nL5N1FT0DF
The planned share offering is a big strategy switch for
Kerimov's family, who delisted the shares of Polyus's
Jersey-registered parent company from the London Stock Exchange
in late 2015 amid Western sanctions imposed on Moscow.
Polyus's return to London may coincide with a potential
initial public offering by En+ Group, which manages Russian
tycoon Oleg Deripaska's aluminium and hydro power businesses.
urn:newsml:reuters.com:*:nL5N1H72UO
Polyus has said that it would place its shares in Moscow as
it needs to raise its free float to at least 10 percent to meet
a requirement of the Moscow Stock Exchange, and would consider
placing global depositary receipts in London. urn:newsml:reuters.com:*:nL8N1BE0XY
urn:newsml:reuters.com:*:nL8N1CK4OS
Polyus's free float is currently 6.76 percent after the
cancellation of some of treasury shares in April, in a move
which would technically pave the way for the SPO.
urn:newsml:reuters.com:*:nL8N1HI576
(Reporting by Polina Devitt, Julie Zhu, Olga Popova, Yan Jiang,
Dasha Afanasieva, Katya Golubkova, Oksana Kobzeva and Darya
Korsunskaya; editing by Jane Merriman)
((Polina.Devitt@thomsonreuters.com; +7 495 775 12 42; Reuters
Messaging: polina.devitt.reuters.com@reuters.net))
Keywords: RUSSIA POLYUS/CHINA