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IPO Watch: Nordgold joins rush to market with £3.5bn London listing

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·3-min read
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Gold bullion bars sit following casting at a refinery in Germiston, South Africa. Photographer: Waldo Swiegers/Bloomberg
Gold bullion bars sit following casting at a refinery in Germiston, South Africa. Photographer: Waldo Swiegers/Bloomberg

Russian gold producer Nordgold has announced plans to float on the London Stock Exchange (LSEG.L) to capitalise on the soaring price of the precious metal.

The company, which is planning a secondary listing in Russia, will sell a 25% stake to investors in an initial public offering (IPO), it said on Thursday. It is aiming for a premium listing that would make it eligible for inclusion in FTSE indices.

The IPO will widen options for raising capital and help Nordgold retain key managers, the company said. New shares won't be issued, with insiders and existing investors selling down their stakes instead.

Watch: How to prevent getting into debt

Read more: IPO watch: From DarkTrace to Deliveroo, the winners and losers of London listings

The miner did not disclose pricing information but it is believed to be worth around $5bn (£3.5bn), the Wall Street Journal reported.

"Now is the right time for Nordgold to seek a premium London listing," chief executive Nikolai Zelenski said. "We look forward to sharing our story with potential investors over the coming weeks."

Nordgold is majority owned by Russian billionaire Alexei Mordashov and his sons Kirill and Nikita. The company was previously listed in London but delisted in 2017.

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 in 2020, making $1bn in core profit. The company is developing two new gold mines and hopes to boost output by 20% over the coming five years. 

Nordgold said its 2021 dividend payments will total $400m, to be paid in two equal instalments. 

Gold prices surged to a record high above $2,000 an ounce in August last year as investors rushed into safety assets during the pandemic. The precious metal has traded down from those highs but has been rising steadily since early March.

The price of gold has soared since the start of the COVID-19 pandemic. Photo: Yahoo Finance UK
The price of gold has soared since the start of the COVID-19 pandemic. Photo: Yahoo Finance UK

The London Bullion Market Association (LBMA) expects gold prices to increase by 11.5% in 2021 to $1,974 per ounce. Gold (GC=F) was down 0.1% to $1,895 around 9AM in London on Thursday.

Nordgold is one of a number of gold miners that have come to the London market in recent months. Canada's Yamana Gold listed in the capital in October last year and Endeavour Mining is expected to list this year after announcing it was assessing the option in August 2020.

The listings are part of an IPO boom in London and around the world in so far in 2021. Other notable London listings so far this year include Darktrace (DARK.L), Deliveroo (ROO.L), and Dr Martens (DOCS.L). The likes of UK Residential REIT and Made.com have announced plans to list, while Wise (formerly TransferWise), BrewDog, and EG Group are all tipped to join the listing spree soon.

Citigroup (C), JPMorgan (JPM) and VTB Capital have been appointed as co-ordinators and joint bookrunners for Nordgold's offering.

Watch: What are SPACs?