Russia’s MegaFon has priced shares and global depository receipts in its IPO in London and Moscow at US$20 each – the lower end of the indicative range – valuing the total 15.2% stake at US$1.7bn.
The mobile operator announced today that the…
Russia’s MegaFon has priced shares and global depository receipts in its IPO in London and Moscow at US$20 each – the lower end of the indicative range – valuing the total 15.2% stake at US$1.7bn.
The mobile operator announced today that the offering consisted of 84,526,819 shares, to be traded in Moscow, and GDRs, to be traded in London.
The offer price implied a market capitalisation of US$11.1bn at listing.
As expected, Russian businessman Alisher Usmanov’s AF Telecom remains MegaFon’s controlling shareholder with a 55.8% stake. Swedish telco TeliaSonera has reduced its stake from 35.6% to 25% plus one share, while MegaFon subsidiary MegaFon Investments (Cyprus) Limited (MICL) also sold shares.
MegaFon plans to use about half of the proceeds received from MICL to repay or refinance existing debt and the rest for general corporate purposes, including network development.
Selling shareholders have agreed to grant the joint bookrunners an over-allotment option to acquire up to 10% of shares and GDRs at the offer price.
Conditional dealings in the GDRs on the London Stock Exchange, and shares on Russia’s MICEX Stock Exchange, starts today. The GDRS are expected to be included on the LSE’s Official List, allowing for unconditional trading, on 3 December.
Morgan Stanley and Sberbank CIB were joint global coordinators and bookrunners for the IPO, while Citi, Credit Suisse and VTB Capital were also bookrunners.
MegaFon CEO Ivan Tavrin said there was strong demand from institutional investors in all regions in which the securities were offered, namely the UK, Russia and wider Europe.
“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. We look forward to delivering further profitable growth and value creation as we continue to leverage our leadership in mobile data to exploit the significant opportunities we see ahead.”
Initially, MegaFon – Russia’s second-largest mobile operator in terms of subscribers – said it would float up to 20% of the company’s share in the IPO. After Goldman Sachs withdrew from the process, the UK Listing Authority took weeks longer than expected to grant its approval, meaning the listing was briefly postponed. In a further challenge for the selling shareholders, Usmanov became the subject of negative media attention internationally during the fortnight-long roadshow.
Nonetheless, MegaFon’s IPO is the largest by a Russian company in nearly three years.
TeliaSonera president and CEO Lars Nyberg, who announced yesterday that he would invest US$2m of his private funds in the IPO, said he believes MegaFon has achieved its goal of improving liquidity and visibility via the process.
“Following completion of the IPO, we will receive substantial proceeds while retaining a strategic stake in the company, which will enable us to benefit from its future success,” he said.
