Moscow's VTB Capital Invests $100M in Russia's Polymetal

Russian gold and silver miner Polymetal has secured a $100 million investment from Moscow investment bank VTB Capital as part of its planned listing on the London Stock Exchange, the company's deal prospectus showed on Friday.

Russia's fourth-largest gold producer and largest silver miner last year, Polymetal said in September it wanted to raise $500 million and gain a premium London listing in an attempt to enter the FTSE 100 blue-chip index .

VTB Capital has a long-standing relationship with Polymetal and has taken this decision in support of the company. Ultimately, the investment will only represent ... around 1 percent, Alex Metherell, head of natural resources at VTB Capital, told Reuters.

He added the bank was not locked into the shares for a given period, unlike a cornerstone investor in a traditional initial public offering (IPO).

Under the terms of the deal, Polymetal's Moscow-listed shares and its London-listed Global Depositary Receipts (GDRs) will be exchanged for stock in a New Jersey-based holding company, Polymetal International, that will list in London.

The move is designed to increase liquidity in the stock, attract foreign investors keen for exposure to the gold sector, and raise cash for acquisitions.

A similar type of move is planned by Russia's top gold miner Polyus Gold , which reversed into Kazakh firm Kazakh Gold to obtain a London listing.

Polymetal is hoping to price the shares for the placement on October 28, financial market sources told Reuters on Friday.

Another source said the deal book would not open until October 24.

Marketing to potential new investors was launched this morning. There is a lot of interest in a gold stock coming to the London market, and our initial impression is there will be positive interest from investors, VTB's Metherell said.

Polymetal Chief Executive Vitaly Nesis told Reuters this week there was investor support for the deal despite recent market volatility.

The company's main shareholders are Nesis, Czech private equity group PPF, and billionaire Alexander Mamut, owner of British bookseller Waterstone's.

HSBC and Morgan Stanley are acting as joint sponsors to Polymetal International for the listing.

Deutsche Bank, HSBC and Morgan Stanley are acting as joint global co-ordinators and, together with VTB Capital, as joint bookrunners in relation to the offer. Collins Stewart is co-lead manager for the offer.