Chinese Fosun agreed to buy 20-25% of the Russian “Polyus Gold”

Polyus Gold
Polyus Gold

Chinese Fosun International Ltd agreed to acquire a 20-25 percent stake in Russia’s largest gold producer Polyus in the amount of up to $2 billion, as per materials of the Russia-China Intergovernmental Commission.

The fact that Chinese and Russian companies are going to sign the agreement reporters learned from the first Deputy Prime Minister Igor Shuvalov.

Fosun controlled by Chinese billionaire Guo Huancano conducted an exclusive negotiating to buy a large minority stake in Polyus  three sources told Reuters in the Fall of 2016.

This investment could be the first such deal with Russia for the Chinese group, which according to sources also discussed the purchase of a minority stake in Russian investment bank Renaissance Capital.

In December last year the Polyus Board of Directors approved the additional share issue of 28.6 million shares. In April the company repaid 63,082 million Treasury shares following the accession of a wholly controlled subsidiary OOO “Polyus-invest” bringing the total number of shares of the company (fell) to 127,545 million shares.

Gold mining company “Polyus” is planning to conduct a secondary share placement (SPO) in May-June of the current year simultaneously at the Moscow and London stock exchanges. Also in April the Moscow Exchange announced the transfer of “Polyus” shares to the first level of the securities list admitted for trading. One of the requirements of the Exchange for the securities of such level is that not less than 10% of the company’s shares are in free float. Free floating “Polyus” shares at the present time are 6.76%.

3 Comments

  1. Instead of 25% they are now discussing only 10% stake at a higher price per share, a call-option for 5%, and only 2 directors to the board. Polyus Gold is also preparing for SPO – separate from Fosun deal.

  2. P/E is calculated to be 10 which is pretty high. If it is the ‘trailing’ one – then the ‘forward’ one is even higher.

  3. “Polyus” intends to increase the share in the project of development of “Sukhoi Log” in the Irkutsk region from 74,9% to 100%. The owner of the license to the field – “CL gold” LLC. The structure of “Rostec” – “RT business development” in exchange for a 25.1% stake in “CL gold” LLC in five years will be able to obtain the shares of “Polyus”. (Polyus is the largest gold mining company in Russia, ranked in the top 10 gold companies in the world.) In January 2017, “CL gold” won the auction for the right to develop “Sukhoi Log” field. Only companies in which the state directly or indirectly owns at least 25% could participate in the auction. “Rostec” owned 49% in the “CL gold” LLC. But in December 2016, a daughter “Polyus” called “Polyus-Krasnoyarsk” – concluded series of options with “RT business development” to increase the stake in “CL gold” by 23.9% through 2022 and about $139 million. Now, the company has entered into a new agreement under which Rostec will receive a share in “Polyus” in exchange for 25.1% in the “CL gold”. For the transaction the share of “Rostec” in the “CL gold” are valued at $145,9 million

    “Polyus” shares will be evaluated before each deal based on the average price of the ordinary shares on the Moscow Stock Exchange and the official rate of the dollar against the ruble over the previous 90 days. “Polyus” have the right to accelerate the process, says the company.
    On 11th July 2017 at the Moscow Exchange for $145,9 million anyone could buy a 1.4% stake in the “Polyus” and at London Exchange – a 1.7% stake.

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