Mass Media Overview
Severstal's Nord Gold Begins $1 Billion London IPO
03.02.2011 13:08
http://www.businessweek.com/
January 17, 2011
By Maria Kolesnikova and Zijing Wu
Jan. 17 (Bloomberg) -- Nord Gold NV, a unit of Russian billionaire Alexei Mordashov's steelmaker OAO Severstal, began an initial public offering of shares in London to raise more than $1 billion for expansion and to repay its parent's debt.
Nord Gold will sell at least 25 percent of the company, which mines for precious metals in Russia, Kazakhstan and western Africa, the unit said in a statement today.
The sale will raise at least $1 billion, two people with knowledge of the matter said today. If successful, Nord Gold's IPO would be London's biggest since the $1 billion offering of Nathaniel Rothschild's mining fund Vallar Plc in July. The stock is due to be priced and start trading as early as Feb. 7, according to terms for the sale obtained by Bloomberg.
Russian raw materials producers are seeking funds in London as commodity price gains outpaced stocks and bonds in 2010 and demand surged in China, the biggest user of everything from copper to cotton and soybeans. OAO Koks, a Siberian coking coal and pig iron producer, and Russian pipemaker ChelPipe announced IPO plans last week. Gold rose 30 percent in London last year.
Nord Gold will gain more than $240 million from the sale, while the balance of the proceeds will go to the company's current shareholders, according to one of the people.
International Scope
"From our Russian origins we have grown into an internationally diversified gold miner," Chief Executive Officer Nikolai Zelenski said in the statement. The offer "will enable Nord Gold to continue pursuing this strategy," he said.
Morgan Stanley, Credit Suisse Group AG and Troika Dialog are managing the IPO. Nord Gold may grant an over-allotment option of as much as 15 percent of the offering, it said.
The company, which has invested $1.3 billion in its mines in Russia, West Africa and Kazakhstan, produced 589,000 ounces of gold last year and is forecasting output of more than 1 million ounces by 2013. Nord Gold reported sales of $485.3 million in the first nine months of 2010.
Severstal rose as much as 4.1 percent to 591.50, the highest since July 2008. The shares climbed 3.8 percent to 590.15 rubles by 1:32 p.m. in Moscow trading.