Kazakhstan and founders mull bid for Central Asian miner ENRC

Shares in Eurasian Natural Resources Corporation (ENRC) jumped by 26 per cent yesterday after a consortium of key shareholders in the Kazakh miner announced they were considering an offer for the company.

Alexander Machkevitch, one of the group’s founding shareholders, issued a statement noting “the recent press speculation with respect to Eurasian Natural Resources Corporation”, and saying he “is reviewing a number of potential opportunities which include the possibility of forming a consortium together with [other founders] Mr Alijan Ibragimov, Mr Patokh Chodiev and the Kazakh government”.

Mr Machkevitch stressed that his “deliberations are at a very preliminary stage and, accordingly, there can be no certainty that an offer will ultimately be made for ENRC”. Despite his caution and lack of detail, the market sent ENRC shares up by 61.2p to 291p, to value the company at £3.7bn. Under Takeover Panel rules, the consortium now has until 5pm on 17 May to make a firm decision to bid or walk away.

ENRC has iron ore and ferro-alloy operations in Kazakhstan, copper and cobalt businesses in Africa, and an iron-ore project in Brazil.

The potential bid is thought to be motivated in part by a rule coming into effect in January, which requires companies to have a “free-float” of at least 25 per cent. The three founders and Kazakh government already hold around 55 per cent of ENRC, while Kazakhmys, another Kazakh mining group, has just under 26 per cent. This leaves ENRC with a free-float of just 18 per cent.

Earlier this week it emerged the Serious Fraud Office has demanded documents from the law firm investigating corporate governance issues at ENRC, in a sign it is considering a formal criminal inquiry. ENRC declined to comment.