Kerimov Offloads 68% of Polymetal

VedomostiAlexander Mamut bought the stake in the gold and silver miner together with PPF Group.
Czech investment fund PPF and businessmen Alexander Nesis and Alexander Mamut have taken a 68 percent stake in Polymetal, Russia's largest silver miner and third-biggest gold producer, the company said Monday.

The new shareholders bought their stakes from the banking-and-commodities billionaire Suleiman Kerimov. Neither of the players disclosed the price of the deals, but some analysts put the sum at $2.1 billion.

PPF Group, owned by the Czech Republic's richest businessman, Petr Kellner, acquired 24.9 percent of the company, while Nesis, the brother of Polymetal CEO Vitaly Nesis, took 24 percent through Ist Group, which he controls, and Alexander Mamut took 19.1 percent, Polymetal said in a statement.

The new investors said they wanted to make the most of Russia's growing gold and silver market.

"For PPF it is a purely financial investment," PPF Group spokesman Alexei Bekhtin said. "We expect its appreciation in three to five years' time. In our view, Russia's precious-metals market has great potential."

Nikolai Dobrynov, vice president of Ist Group, echoed that sentiment in an e-mailed statement. "Polymetal shares are undervalued and have good prospects for growth," he said.

Maxim Stulov / Vedomosti
Alexander Nesis bought the stake in the gold and silver miner together with PPF Group.

Suleiman Kerimov's investment vehicle, Nafta-Moskva, said Monday that it did not have a press office and no one was available for comment.

Polymetal Global Depositary Receipts climbed 25 cents to close at $8.65 in London on Monday, valuing the company at $2.7 billion. On MICEX, the company's stock rose 2.15 percent to 206.3 rubles.

Ist Group founded Polymetal in 1998, with the aim of creating a vertically integrated precious-metals miner that comprised geological survey, engineering and extraction, and sold the asset in 2005 to Kerimov, Polymetal's web site said.

"The return of the Ist Group shareholders to Polymetal will positively influence the work of the company," Troika Dialog metal expert Mikhail Stiskin said Monday. "The group has a positive record in financial investment, and it will safeguard the interests of the current management."

Dmitry Skvortsov, an analyst at Bank of Moscow, estimated that the deal was made at 10 to 15 percent above the market cost of the company, valuing Kerimov's stake at $2.1 billion.

Kerimov appeared to have gained from the deal, as he bought a 100 percent stake in Polymetal from Alexander Nesis in 2005 for $900 million.

Kerimov earned $294.5 million through an initial public offering of 24.8 percent of Polymetal shares in London last year. In 2007, Polymetal's output fell to its lowest in three years, while its profit for the first half of 2007, according to generally accepted accounting principles, stood at $139 million.

Rumors have been rife about Kerimov looking to sell his stake in Polymetal since March, and Roman Abramovich and Severstal's Alexei Mordashov were mooted as potential buyers.

Kerimov is thought to be seeking to raise money to acquire stakes in Western banks including Deutsche Bank, UBS and Credit Suisse.