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30 June 2017

Polyus Raises $800 Million in Year’s Biggest Russian Sale

Gold producer Polyus PJSC raised about $800 million in a stock offering in Moscow and London, making it the biggest sale by a Russian company in a year.

The nation’s top miner of the precious metal, controlled by the family of billionaire Suleiman Kerimov, sold a 9 percent stake at $66.50 per ordinary share, according to a statement on Friday.

Polyus also granted Goldman Sachs Group Inc., the deal organizer, over-allotment option for 1.2 million of additional shares. If it is exercised, the value of the deal may increase to about $880 million, the miner said.

While the shares were sold at the low end of the valuation, it’s still the largest deal by a Russian firm since Alrosa PJSC’s $816 million offer in July 2016. It is also became the biggest Russian share sale with international marketing since 2014, Chief Executive Officer Pavel Grachev told reporters on Friday.

The sale marks Polyus’s return to London after its parent, Polyus Gold International Ltd., delisted from the city in late

2015 as the Kerimov family bought up stock in a plan to domicile in Russia.

U.K. investors bought about a half of the shares, Boris Kvasov, director of equity capital markets at VTB Capital, said by email. North American investors purchased about 20 percent, and those from continental Europe got 10 percent.

The miner didn’t increase the price of the offer as its "objective was to ensure broad participation of the market, good liquidity post transaction and solid post deal performance,"

Chief Financial Officer Mikhail Stiskin said by email.

Polyus sold stock to meet free-float requirements to retain a primary listing on the benchmark Moscow Exchange. The sale, including the over-allotment option, will increase the free float from 6.8 percent to 16.4 percent on a post-money fully- diluted basis. Polyus will get $400 million from the deal.

Russian Companies

Russian companies had pulled back from overseas markets in recent years amid low commodity prices, U.S.-led sanctions against the country and prodding from the Kremlin to favor Moscow listings. While Polyus is among local firms looking abroad again, it marketed the new shares as the U.S. considers new sanctions and broadened a list of individuals and companies penalized for the annexation of Ukraine’s Crimea peninsula in 2014.

Some planned share sales, including from the state- controlled shipping company Sovcomflot OJSC, are reportedly being rescheduled. En+ Group Ltd., controlled by billionaire Oleg Deripaska, may seek a $2 billion initial public offering in London and Moscow after the summer, people familiar with the matter said this month. It had previously been expected to sell shares in June.

Goldman Sachs, JPMorgan Chase & Co., VTB Capital and Sberbank CIB are joint coordinators and bookrunners of the Polyus deal, while BMO Capital Markets, Gazprombank and Morgan Stanley are joint bookrunners.

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