(Adds potential valuation, quotes from sources, background)
By Polina Devitt and Abhinav Ramnarayan
MOSCOW, June 3 (Reuters) - Russia-focused gold producer
Nordgold plans an initial public offering (IPO) of at least 25%
of its existing shares in London and Moscow, it said on
Thursday, with two sources saying the company would target a
valuation of up to $5 billion.
Nordgold, majority owned by Russian billionaire Alexei
Mordashov and his sons Kirill and Nikita, was previously listed
in London but delisted in 2017. It is aiming for a premium
listing that would make it eligible for the FTSE indices.
"Now is the right time for Nordgold to seek a premium London
listing," Chief Executive Nikolai Zelenski said in a statement.
"We look forward to sharing our story with potential investors
over the coming weeks."
Nordgold operates four mines in Russia, one in Kazakhstan,
three in Burkina Faso and one in Guinea. It produced 1 million
troy ounces of gold last year, earning core profit of $1
billion.
Two sources close to the transaction said the company could
seek a valuation of anywhere between $4 billion and $5 billion,
based on earnings multiples at which rivals such as Polyus Gold
, Polymetal and Petropavlovsk trade.
That suggests the IPO deal size could be between $1 billion
and $1.25 billion, though one of the sources said it could be
even higher.
"Nord Gold is slightly different because half its operations
are outside Russia, but based on where these companies are
trading it could easily achieve $5 billion (valuation) and it
only becomes a matter of what discount you want to offer," the
source said.
Russian companies have been back on global investors' radar
since late last year, with IPOs slated for 2021 expected to
raise at least $10 billion, the highest in more than a decade,
UBS said in March.
Gold prices hovered near five-month highs on
Thursday, supported by a pullback in U.S. Treasury yields.
Nordgold said it plans to boost output by 20% over the next
five years and that its 2021 dividend payments would total $400
million.
The Mordashov family are the selling shareholders in the
deal and Nordgold will not receive any proceeds from the
offering. Citigroup, J.P. Morgan and VTB Capital
are co-ordinators and joint bookrunners for the offering.
(Reporting by Polina Devitt and Abhinav Ramnarayan
Additional reporting by Olga Popova
Editing by David Goodman)
