Dual listings, ESG and offsetting perceived risk: Inside IR at Polyus

Victor Drozdov is head of investor relations at Polyus, the Moscow-headquartered mining firm that is also Russia's largest gold producer. Here he talks to IR Magazine about how the company has changed its approach to corporate access under Mifid II, how ESG is becoming an ever-more important element of its reporting and what he’d be doing if he hadn’t gone into IR.

How did you get into investor relations and how is the Polyus IR team set up?

I’ve been completely obsessed with the capital markets since my time as a student, and I have worn several different hats in the capital markets industry during my professional career. I started in equity sales before moving into sell-side equity research at VTB Capital. I had a yearning to move to the corporate side, so I joined Severstal’s investor relations department before moving to Polyus as head of IR in 2016.

What I really enjoy about IR is the constant dialogue with the market, sharing my thoughts and hearing the thoughts of some very bright people in and around the capital markets. 

I have come to realize that investor relations is very much a multi-faceted role. It is about keeping investors reassured that they know all the aspects of the company’s performance, about making sure you know exactly what to say, when and to whom. Furthermore, it is about ensuring management is aware of all developments in the market and making sure the company remains compliant with all regulatory requirements. This is the great thing about IR: you need to be on top of everything and it keeps you sharp. There is no exact path to success in our field but building and maintaining trust is always a vital focus point.

Every IR program differs depending on the company’s needs and the emphasis leadership puts on IR. At Polyus, we cover a vast segment of corporate communications and engage with a very wide range of different stakeholders.  These include investors, analysts, journalists, ESG ratings agencies, brokers and bankers. Although we may use different channels to convey our investment case, the IR focus has one goal: keeping the market informed of every aspect of our performance. While no day is the same and there are multiple challenges, it helps that we are telling a story of very strong performance and sector leadership. 

Our commitment to IR means we cover many work streams within our IR department, which is made up of eight people. These include some unconventional work streams, often performed by advisers such as those in corporate access and investor targeting. We are also proud of the thorough market and sector analysis we undertake. The recent arrival of new stakeholders such as ESG ratings agencies highlights how those work streams are constantly evolving.  

Polyus is a dual-listed company. What are the benefits of being listed on both the Moscow and London stock exchanges? What challenges does this present and how do you address those from an IR perspective?

We are not alone among global gold miners in this regard: many of our peers have dual listings on the stock exchanges of Toronto, Johannesburg, London and the US. This has the obvious benefit of providing us with access to a wider investor audience. The company does have to comply with two sets of listing requirements, which can pose an additional challenge – but these are often similar and compatible with each other.

As one of the world’s largest gold miners, how often do your investors and analysts ask ESG-related questions? How have you seen this conversation evolve in recent years and in what ways have you adapted in terms of IR?

Over the last year we have seen investor interest in ESG issues rise sharply. We have done a lot of work to adapt to an increasing demand for higher levels of disclosure and we have enhanced our transparency and reporting of matters relevant to ESG. It’s an exciting development for the industry, and Polyus is fully on board. We want to ensure investors and rating agencies are able to access as much information as possible and can form a clear understanding of where our company stands in terms of our ESG performance. We now have a person dedicated specifically to ESG in our investor relations team.

In what ways have geopolitics and currency fluctuations impacted the company – and your IR program – in recent years? 

The valuation of Russian stocks, Polyus among them, has historically been disproportionally influenced by geopolitics. Ultimately, we need to face the fact in the current geopolitical environment, with evolving risks, that there is not much any corporate can do to reduce this perceived fundamental risk. 

But one step we can take to mitigate risk, and a process our IR program is vigorously focused on, is setting new best practices in terms of our level of disclosure. If you compare our levels of disclosure with those of mining companies from other emerging markets, you will really see the difference. Providing the market with as much information as possible and making sure investors have clear visibility on the company’s future development is what distinguishes us from other market participants and helps us partially offset geopolitical risk as far as is possible.

As a Russian firm with a dual listing in London, have you seen any impact from Mifid II yet? If not, have you prepared for potential impact in the future?

The biggest consequence of Mifid II for us so far is seen in the changes we made to our own working practices: we now engage directly with the investment community and Polyus is one of the first companies in Russia to realize the necessity of establishing an in-house corporate access system. Given the nature of the market, this is an extensive task and requires constant development, but the investor community has welcomed the move. 

What are some of the top issues investors and analysts are asking about at the moment?

Asset quality is one of the most important issues in the gold mining industry, which is why we always make sure to dedicate a lot of time to explaining our current development projects: the new technologies, new equipment and managerial enhancements of the production process. Our biggest development story right now is Sukhoi Log, a unique gold deposit in Siberia and one of the largest undeveloped deposits in the world. Without fail, updates on Sukhoi Log are one of the ‘hot topics’ we are always asked about. We are currently studying the geology of the deposit and developing the project with a view to possibly launching production in 2026.

From an IR perspective, what has been your biggest challenge in the role so far?

The biggest challenge I face on a daily basis has been the same for the last four years: how to continue re-establishing the proper and sound public story of one of the world’s largest gold mining companies that has been committed to the public markets since its formation in the mid-2000s.

With regard to more particular challenges, learning to operate and build proper communication channels in the post-Mifid II environment has been the hardest individual challenge I have faced.

And what about your highlight?

I joined Polyus in exciting times, just as the company was about to return to the market and relist in London and Moscow (Polyus completed its secondary public offering in 2017). We successfully reintroduced Polyus to the global investor community and conducted the public offering, followed by several public debt issuances.

But the highlights come hand-in-hand with the challenges if you want to incorporate best practices across the board. One accomplishment I am very proud of is the development of our own in-house corporate access system, which we established in 2018. 

At the majority of our destinations, we are now discussing options for non-deal roadshow meetings with investors directly. We are extremely proud of being the first (and, so far, the only) Russian company to prove this can be done without the involvement of brokers. And we are confident of the outcome. 

If resources were no object what would you like to do better or more of?

Introduce low-cost, supersonic travel to cut down flying time!  

In all seriousness, time is probably our scarcest resource. With this in mind, I would like to spend more time supporting the professional development of my team. Polyus leadership places great emphasis on the education and development of our junior staff, with very good levels of investment and training, but there is no substitute for spending time with all IR colleagues.  

Finally, what would you be doing if you hadn’t gone into investor relations? 

That’s a good question, and I have a quick and easy answer. I would be running my own family restaurant business, which would involve spending a considerable amount of time building and maintaining a network of loyal customers. Ironically it is very similar to what I do on a day-to-day basis.