Norilsk Nickel's Board of Directors approved the sale of up to 39.32% in Bystrinsky project ti CIS Natural Resources Fund, as follows from the statement on the London Stock Exchange. From this it follows that Norilsk Nickel estimates the value of the company based on the last transaction: $ 730 million for 100% (in summer, Chinese Highland Fund bought 10.67% for $80 million). But if the company closes the deal and buys back 2.66%, as intended before, for $ 20 million, the estimate for the calculation of transactions with CIS Natural Resources Fund will be $750 million for 100%.
Final share, which will be able to buy CIS Natural Resources Fund, depends on the use of Chinese investor's (Highland Fund) pre-emption rights, said a representative of Norilsk Nickel. If the Chinese partners increases the share by an additional 2.66%, CIS Natural Resources Fund may buy back up to 36.6%, and if not, 39.32%. Norilsk Nickel has always talked about wanting to retain control in Bystrinsky project, notes Vedomosti's source.
Thus, Norilsk Nickel expects to recieve from CIS Natural Resources Fund from $267 million to $294.9 million. The transaction is expected to close before the end of the year.
Investors liked the news of the Moscow stock exchange: Norilsk Nickel has risen in price by 0.4% to 1.5 trillion rubles. while the MICEX index was reducedby 0.04%.
Vice-President of Finance of Norilsk Nickel. Sergey Malyshev, explains the sell by the need to reduce risks for the company.
Consumption of copper in the near future will continue to grow due to an increase in metal consumption in China and increased production of electric cars by 188% in 2016, says ACRA analyst Maxim Khudalov. He notes that in 2017 we can expect further increase in copper consumption in China in connection with the growth expectations of the construction of power grids. Against the backdrop of a weakening of the yuan could increase the export of Chinese electronics, which would also support the demand for copper in China, he said.
CIS Natural Resources Fund is a new fund of Vladimir Potanin and his partner Gregory Berezkin; the fund focuses on projects related to natural resources, with a focus on Russia.
In an interview to Vedomosti in December, Potanin said that the team led by Alexey Bashkirov would manage the fund; the same team already manages another fund of Interros, Winter Capital, investing in online retail and pharmaceuticals.
"There are no other investors than Vladimi and me," said Berezkin via the press service back then."We'll be looking into different possibilities in the field of extraction and processing of minerals. <...> For example, Bystrinsky project, Southern Cluster, gas fields in Norilsk".
Vladimir Potanin created a new partnership with Gregory Berezkin
They will invest $250 million in mining operations in Russia
Potanin's Interros and Berezkin's ESN created a fund to invest in natural resource development projects. The owner of Interros and the president of Norilsk Nickel Vladimir Potanin, told Vedomosti about it. Berezkin confirmed it through the representative.
"Recently, we established another fund. Not only Interros acts as a limited partner, there are other partners, the largest of which is ESN of Gregory Berezkin," said Potanin. According to him, this is a new fund, which focuses on projects related to natural resources, with a focus on Russia. The name's CIS Natural Resources Fund. Potanin said that the fund would be managed by a team led by Alexey Bashkirov, which manages another Interros Fund, Winter Capital, investing in online retail and pharmaceuticals.
Winter Capital Advisors is the investment advisor of CIS Natural. Its size is $250 million, told Berezkin and Bashkirov. The Fund will invest in development projects of not only solid minerals, but also oil and gas, said Bashkirov. He noted that the fund would be focused on investments in projects in the middle stage of development, as well as in existing enterprises.
"There are no other investors than Vladimir and I," said Berezkin."We're investigating different possibilities in the field of extraction and processing of minerals. In particular, the projects where Norilsk Nickel would like to attract investors. For example, Bystrinsky project, Southern Cluster, Norilsk gas fields. Norilsk Nickel has been looking for investors for these projects. and considered the possibility of participation of shareholders: Interros, En + of Oleg Deripaska and Roman Abramovich's Millhouse.
In Russia, there are few funds that invest in mining projects at the middle stage of development: Baring Vostok (coal project in Chukotka), State Fund for Development of the Far East, says the chairman of the Union of Gold, Sergey Kaszuba. At the same time, projects at the middle stage of development in the Russian mining sector are many, each one requires $20-40 million for further exploration and feasibility study. The payback time is about 6-8 years, he said.
"For me as the creator of Interros it is important that we have returned to partnership," said Potanin. "We have for a long time - since the crisis, after parting with the previous partner - operated rather individually."
Berezkin is well familiar with Potanin. "We have established a very trusting relationship, and it is under the joint investment, which is important. We are both well versed in investing in this segment, so to speak, speak with the partner in the same language," he said.
Now we're in the right moment of the economic cycle to invest in natural resources, believes Berezkin: the prices of most commodities began to recover, but the stock for growth has not been exhausted, financial flows are shifted to the Asia-Pacific region, close to the border with Russia, he lists. "At the same time, we understand and are willing to bear the risk of investment in Russia," adds Bashkirov. With a weak ruble the only sector with a stable return on invested capital is export, including the mining industry, says director of metallurgy and mining at Prosperity Capital Management Nikolay Sosnovsky, especially since Potanin and Berezkin have experience in mining as well as and in the energy sector.