The largest shareholder of Polymetal, the ICT group, sold its share to an investment fund from Oman

ICT Group, Polymetal’s largest shareholder, unexpectedly sold its stake to an investment fund from Oman. Kommersant’s interlocutors believe that the deal may, in turn, be part of an operation to sell Polymetal’s Russian assets. Polymetal management insisted on selling them in full and without a significant discount, which did not suit potential Russian buyers. Now a possible option would be the purchase of assets by the structures of the former shareholder.

The exit of Alexander Nesis’s ICT group from the second largest gold producer in Russia, Polymetal International plc, opens the way to the separation of Russian assets from the company and their sale, according to Kommersant’s sources in the industry.

Polymetal January 29 reportedthat ICT’s 23.9% stake is being purchased by Mercury Investments International (MII LLC), a structure of Oman’s state investment fund.

The amount of the transaction was not disclosed, but on the Astana exchange such a package at current quotes is worth about $554 million. ICT group representative Konstantin Yanakov 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 Polymetal said, will remain in his post.

“We are pleased that MII LLC has confirmed its full support for Polymetal’s strategy, which includes reducing business risks through the sale of Russian assets and further development of production in Kazakhstan and the Central Asian region as a whole,” commented Vitaly Nesis on the deal.

In August 2023, Mr. Nesis said that the company intended 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 came under US sanctions, but they did not affect the entire Polymetal International group. In August, Polymetal re-registered from the island of Jersey to Kazakhstan, while the company’s shares are also traded on the Moscow Exchange.

In September 2023 Vitaly Nesis declaredwhich does not expect “catastrophic discounts” when selling a Russian business, but the price will be lower than historical multiples.

According to the AIX exchange in Astana, since January 2022, Polymetal International shares have fallen in price four times, to $4.62 per share, and on the Moscow Exchange in rubles – by 2.4 times, to 500.6 rubles.

“My Investments” analysts in their Telegram channel wrote that shares on the Moscow Exchange are trading at a premium to securities on the AIX, which is “fundamentally unfounded.”

Russian assets of Polymetal were interested many investors. According to Kommersant, among them were all the major players in the industry: Polyus, Vladislav Sviblov’s structures, UMMC, Seligdar, as well as Roman Abramovich’s ex-partner at Sibneft and Highland Gold, Ivan Kulakov. However, as Kommersant’s sources in the industry say, none of them currently has a serious interest in acquiring all assets in the Russian Federation: the “everything, at once and expensive” conditions set by top management do not suit them. In this case, it is possible, the interlocutors suggest, that Russian businesses will be bought out by structures associated with ICT. Apart from the ICT group, no one needs the full package of Russian assets, says Kommersant’s interlocutor familiar with the situation. The ICT group declined to comment when asked by Kommersant regarding the possible purchase of Russian assets of Polymetal.

“For the company itself, we do not see any significant risks after the change of shareholder, since the sale will not have an impact on operational and financial performance,” comments Dmitry Smolin from the Sinara investment bank.

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.

Managing partner of the Veta expert group, Ilya Zharsky, believes that the proposed transaction for the sale of Russian assets of Polymetal should not de jure be subject to the 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 float, and their owners, in addition to management (3.3%), include the American investment company BlackRock (9.9% ) and Fodina BV (3.3%), owned by the heirs of Czech businessman Petr Kellner.

Evgeniy Zainullin