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Norilsk falters as Abramovich sells shares below market value

PJSC Norilsk Nickel Co.'s share price dropped more than 4% upon opening March 13 in Moscow before pulling back slightly, after Roman Abramovich and Alexander Abramov's Crispian Investments sold a stake in the major nickel and palladium producer at below market value in a March 12 accelerated bookbuild.

Crispian, which originally planned to sell a 1.25% interest, sold a 1.7% stake for 13,450 rubles per share, representing a 6.5% discount on the March 12 closing price of 14,380 rubles, according to Russian news agency Interfax.

The move prompted Norilsk to lead the ruble-denominated Moscow Exchange Russia Index down 0.2% on Wednesday morning as shares fell by as much as 4.3% to 13,756 rubles apiece.

Vladimir Potanin and Oleg Deripaska, principal shareholders of Norilsk, have been embroiled in a protracted dispute over control of the company since Deripaska's Rusal bought a stake in 2008. In 2012, Kremlin insider Abramovich brought an uneasy peace to the deadlock by acquiring a 6% minority stake for five years through Crispian.

Abramovich sold a 2% stake in Norilsk to Potanin in 2018. He had originally agreed to sell a 4% interest, but a London court subsequently arbitrated in favor of Deripaska, forcing Potanin to return 2% to the aluminum magnate.

Firms controlled by Potanin and Deripaska were unable to participate in the latest placement, an anonymous source told Interfax.

Norilsk CEO Potanin remains the largest shareholder, owning 34% of the miner through conglomerate Interros, while Deripaska has 27.8% through aluminum producer Rusal.

Crispian, which now owns 6% of Norilsk, pledged not to sell more shares in the company for two months after the latest placement.

The main participants in the deal were investors from the U.K. and Russia, Interfax reported, citing data from VTB Capital, which helped broker the accelerated bookbuild.

"This deal is the biggest placement of shares in a Russian company since the [accelerated bookbuild] for Magnit's shares in November 2017 and the biggest placement in the global mining and metals sector this year," Interfax quoted VTB Capital Executive Director of Equity Capital Markets Dmitry Bolyasnikov as saying. According to Bolyasnikov, investors from the U.K. picked up 39% of the offering.

Investors from the U.S. and continental Europe also made significant bids, while Russians accounted for 33% of subscriptions, raising the deal's volume to 1.7% — about US$551 million at the offering price — from 1.25%, Bolyasnikov added.

In 2017, Russian steel producer OAO Metalloinvest sold its entire 1.79% Norilsk stake to generate US$400 million. The deal comprised a placement of 28,382,565 ordinary American Depositary Receipts of Norilsk priced at US$14.10 apiece, which represented a 4.5% discount to exchange prices.

As of March 12, US$1 was equivalent to 65.68 Russian rubles.