Glencore’s Kazakh partner may invest $3.2bn gains in gold IPO
May 10. Daily Telegraph
By Richard Orange, in Almaty
Glencore’s Kazakh partner may reinvest part of its $3.2bn (?2bn) IPO gains in the London flotation of Glencore’s Kazakh gold business.
Timur Issatayev, chairman of Verny Capital, said the Swiss commodities giant would complete the $5bn spin-off of Altyntau Gold in early 2012.
“It’s possible that we will invest in Altyntau.” he told The Daily Telegraph in an interview in Almaty, the Kazakh commercial capital. “From what we know, the Altyntau IPO will be a very good investment.”
Verny, a previously obscure private equity player in the resource-rich Central Asian country, has gained new prominence since it emerged as one of main beneficiaries of the Glencore IPO.
Verny stands to receive $3.2bn of the expected proceeds when Glencore buys out a 42.3pc stake it holds in their mining joint venture, Kazzinc.
The Kazakh private equity company’s largest investor is Bulat Utemuratov, a close aide of Kazakhstan’s president, and its initial capital came from the $2.2bn sale of ATF Bank to Italy’s Unicredit in 2007.
Even though Glencore gained 100pc stake in Altyntau in February 2010, buying Verny Capital’s last 60pc stake, Mr Utemuratov’s son Alidar has remained the company’s chief executive and president.
“He’s been running it for so long, and I think he’s a very able young man, a very able manager,” explained Mr Issatayev. “That’s really it. It’s all very simple and transparent.”
Mr Issatayev said that Verny expected to receive the money from Glencore in the second half of 2011.
“The Glencore IPO is on the 24 May. A few days after they will start implementing the procedure, and then we will get the money. Then it just sits there, hopefully not for long. We have a pipeline of projects.”
Verny Capital had bought its Kazzinc stake from both Glencore and from local Kazakh shareholders, Mr Issatayev explained. It then participated in a capital increase, which took its stake to 49.3pc.
According to its prospectus, Glencore diluted its stake in Kazzinc from 69pc to 50.7 in February 2010, when it issued $936m worth of new shares to buy Verny’s 60pc stake in the Vasilkovskoye gold mine.
“Initially it belonged to the Russian billionaire Arkady Gaydamak. He sold it to a local group of businessmen, and then they sold it to us,” Mr Issatayev said of Verny Capital’s acquisition of the mine in 2007.
Mr Gaydamak was that year indicted by a French magistrate for his alleged involvement in arms sales to Angola, starting a long court battle that only ended when a French appeal court overturned most of Mr Gaydamak’s convictions last month.
“I personally was not worried about Arkady Gaydamak, because he wasn’t selling anything forbidden in Kazakhstan,” said Mr Issatayev. “He was trying to start production of gold, which he failed to do for reasons totally outside of his control.”
“The technology which existed at that time to process the ore created an economic model which wasn’t economic. The gold content is very low, so you needed to have a breakthrough in technology, and that hadn’t yet happened. That was the contribution of Glencore.”