Miner Kazakhmys seen listing at top end of range

/REUTERS, London, October 6, 05/ - Kazakh copper miner Kazakhmys is set to price its initial public offering at the top end of expectations when it floats in London on Friday, fund managers told Reuters, as demand for the metal continues apace. Buy-side sources said the issue would be oversubscribed and was likely to be priced at the top end of a 460 pence to 545p range, on the back of record prices for copper and the firm's low-cost production setup on the border with fast-growing China. Despite concern that the stock might be heavily sold soon after trading begins on Friday, in an echo of what happened to fellow miner Vedanta after its listing in 2003, Seymour Pierce analyst Charles Kernot said he saw strong support for the copper miner. "The feedback that I've received is that it's very well subscribed or oversubscribed so I'm presuming that it's not going to be discounted at all," he said. Kazakhmys plans to raise up to 668 million pounds ($1.2 billion) for the company and existing shareholders when it becomes the second biggest firm to float in London this year. The company would be worth 2.3 billion pounds based on a share price at the mid-point of the range, according to Reuters calculations. A spokesman for the company, which exported over 85 percent of its 428,000 tonne output to China last year, told Reuters its roadshow to market the IPO had gone extremely well. "We have had a very positive response from investors across all regions," the spokesman said. Fund managers also flagged the miner's strong balance sheet and ability to acquire other mineral assets in the vast and mineral-rich Asian nation. "It's got a very strong position in copper," said Standard Life fund manager David Cumming. "I think they've got a strong position in Kazakhstan so they will acquire other mineral assets there and given they have a good balance sheet that would be quite earnings accretive." A decision by world's 10th-largest copper miner to list appears perfectly timed as the metal flirted with fresh all-time highs, trading at $3,894 a tonne on Thursday afternoon. Underpinned by strong demand from China's rapid industrialisation and dwindling stockpiles, the price of copper has risen almost 20 percent since July 1. However some analysts, including Kernot, cautioned that given concern copper prices may have peaked, Kazakhmys' share price might fall almost immediately after starting trade. Recent selling of shares in FTSE-100 miners such as Antofagasta, BHP Billiton and Xstrata has been attributed by some to investors funds pouring into Kazakhmys but also jitters that copper cannot sustain its run. "Quite a few people have been indicating to me that they're going to be selling their shares pretty soon after they start trading," Kernot said. In late 2003, fellow miner Vedanta -- also taken to market by JP Morgan -- was priced at the top end of its target range but its shares fell almost immediately and took 13 months to recover. Kazakhmys, the latest arrival from the former Soviet Union to list in London this year and the first primary listing from Kazakhstan, will trade under the Reuters code when it begins trading. [2005-10-07]