Polyus Gold is locked up in Russia and Vladimir Putin holds the key.
Russia’s biggest gold miner, which plans to redomicile in the UK and join the FTSE 100, has been stopped in its tracks by a Russian government commission on foreign investments.
The commission, which is headed by Putin, on Monday delayed its decision on Polyus’ change of address citing a lack of information provided by the gold company. No details were given on when the commission will reconvene.
This could prove quite a blow for Polyus’ transition to the big league.
The company requires commission approval to change its domicile from Jersey to the UK (when Polyus transferred its abode from Russia to the channel island it had to go through the same procedure). Without Putin’s stamp, Polyus’ dreams of a premium listing and FTSE 100 inclusion hang in the balance, said analysts at Troika Dialog:
The commission’s announcement is unexpected and we hope it is only related to simple technical problems (that will eventually be resolved) rather than any change of heart from the state on the idea of redomiciliation. The lack of approval has the potential to delay the entire transaction and consequently FTSE 100 inclusion.
When/if Polyus attains a premium listing and a UK abode it should expect a mixed reception. The company is seeking to list with a free float of just 13 per cent, and with the ENRC debacle still fresh in the memory, investors are divided over the merits of flouting the listing requirements.
Fortunately for the UKLA then this decision can be put off for a while longer.
In the meantime, investors interested seeking exposure to the Russian gold sector could do worse than investing in Polymetal. The Russian gold and silver producer is on course for FTSE 100 inclusion, potentially before the end of 2011, and will not require any rules to be bent.
Update: Polyus says the company will look to list with 20 per cent versus its current free float of 13 per cent.
“The paradox of small free floats” – FT Alphaville
Polymetal seeks wheeze-free FTSE 100 entry – FT
Russians and the FTSE – what do the Russians get? – FT Alphaville
Russians and the FTSE – what does London get? – FT Alphaville