MegaFon, Russia’s second-biggest mobile phone operator, has raised $1.7 bn in an IPO in London in the largest IPO of a Russian company in at least three years. MegaFon shares fell 2 percent in their first day of trading.
Shares were sold at $20 each, the bottom of MegaFon’s range of between $20 and $25 each, in the November 28 sale, and the shares dropped by as much as 2.8 percent in trading the same day before closing down 2 percent at $19.60.
The IPO, the largest from Russia since the $2.2 bn IPO in 2010 of aluminum maker Rusal, values MegaFon at $11.1 bn.
‘The successful pricing of our IPO today is a clear endorsement of MegaFon’s investment case and reflects investor appetite for the Russian mobile data growth story,’ says Ivan Tavrin, CEO of MegaFon, in a statement on the company website.
‘We look forward to delivering further profitable growth and value creation as we continue to make use of our leadership in mobile data to exploit the significant opportunities we see ahead.’
Alisher Usmanov, Russia’s richest man, remains controlling shareholder of the company with a 55.8 percent stake held through his holding company AF Telecom, and Nordic telecoms company TeliaSonera owns a 29 percent stake. MegaFon’s free float is 15.2 percent of share capital.
‘I am very pleased we have succeeded in what we set out to do: to create value for our shareholders by increasing liquidity and visibility in MegaFon,’ says Lars Nyberg, president and CEO of TeliaSonera, in a release, adding that the company seeks to reduce its stake to 25 percent plus one share.
‘We will receive substantial proceeds while retaining a strategic stake in the company, which will enable us to benefit from its future success.’
Planning for the MegaFon IPO repeatedly ran into controversy and faced several delays, most recently when Goldman Sachs pulled out of its role as lead bank after Usmanov told Reuters in an interview that he aimed to merge his assets, including steel companies and British soccer team Arsenal, into a single umbrella company.
Such a move would have left Goldman Sachs co-ordinating an IPO with an uncertain ownership structure. Morgan Stanley and Sberbank CIB were the joint global co-ordinators in the IPO, and also joint bookrunners with Citi, Credit Suisse and VTB Capital.
MegaFon has approximately 63 mn subscribers, or a market share in Russia of about 27 percent, and it’s the largest operator in the mobile data segment, according to MegaFon.
Earlier this month, the company reported a 20 percent year-on-year increase in third quarter income to б15 bn rubles ($472 mn).
