Nordgold targets up to $5 billion valuation in twin IPO, say sources

By Polina Devitt and Abhinav Ramnarayan

MOSCOW (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)