Russian silver giant to float on London exchange

Andrew Osborn
Wednesday 31 January 2007 02:35
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Russia's largest producer of silver is to float on the London Stock Exchange in a move its billionaire owner hopes will help raise more than $800m.

Shrugging off reports of investor fatigue with Russian companies, Polymetal, the world's fifth biggest silver miner, plans to sell 30 per cent of its shares in a simultaneous offering in London and Moscow next month.

The company has set a price range of $7.25-$9.50 per ordinary share and per Global Depository Receipt, valuing it at almost $3bn if the upper range is achieved.

The sale is not, however, without controversy: Suleiman Kerimov, the 40-year-old billionaire politician who controls the company, was seriously injured in a car crash in the south of France last November and has not been seen in public since.

Russian media report that he has returned to Moscow and is back at his desk but such claims have so far not been independently verified.

Polymetal's prospectus concedes how dependant the company is on Mr Kerimov, a man estimated to be worth $7.5bn by Forbes, making him Russia's eleventh richest individual.

It said: "Any event or circumstance affecting Mr Kerimov as a natural person, such as divorce, incapacity or death, may have an impact on the control over, and ownership of his interest in, the company, or may lead to a change of control."

That statement prompted analysts to question the effective size of Mr Kerimov's stake in Polymetal (thought to be 99.5 per cent) amid reports that his wife and an unnamed oligarch may hold stakes too.

Mr Kerimov's CV has also raised eyebrows: he is an MP representing the ultra-nationalist Liberal Democratic Party led by firebrand Vladimir Zhirinovsky and the holding company he controls - Nafta-Moskva - was named by the US Department of Justice in 2005 in connection with the Iraq United Nations oil for food scandal.

Polymetal itself is one of the crown jewels of Russia's post-Soviet industrial complex.

Based in St Petersburg, it has three mines in Russia's Far East and another in the Ural Mountains.

Last year it produced 17.3 million ounces of silver and 256,000 ounces of gold.

It has ambitious expansion plans but has been criticised for being heavily indebted and for locking itself into forward sales deals at prices that appear to be below market rates.

Separately VTB, Russia's second-largest bank, said yesterday it planned to float in London in May and would reveal more details in three weeks time.

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