Norilsk Nickel - Game for a New Investment Cycle

Vladimir Potanin’s Interros has made a buyout offer to Crispian Investments, a company controlled by Roman Abramovich (and potentially his partners) that owns a 4.2-6.3% stake in Norilsk Nickel (the exact shareholding varies in different sources). We believe that regardless of whether or not Abramovich sells, Norilsk Nickel’s investment case is clearly changing. We are likely to see higher capex after 2019 once the projects go from the feasibility to investment stage and the dividends become fully financed from free cash flow rather than debt. Since we like nickel as a good exposure to the electric vehicles story (remote but already evolving), we still view Norilsk Nickel as a solid investment over the long run (5+ years); however, we note that the stock will likely come under pressure as the dividend hunters start to capitulate and that the stock may lag commodity prices on the way up.