MegaFon relaunches IPO

15 November 2012 |


Russian carrier MegaFon has relaunched its London to Moscow Initial Public Offering (IPO) and plans to raise $1.7 to $2.3 billion.

The company will be valued between $11.2 to $14 billion based on the price range of $20 to $25 per share and global depositary receipt.

The listing involves the sale of existing MegaFon shares with Nordic carrier TeliaSonera and MegaFon’s management lowering their stakes.

Reuters reports that MegaFon’s recent strong financial performance could lure investors from its domestic rival MTS and VimpelCom.

The newswire calculates that around 17% of MegaFon will be sold in the IPO if the overallotment option is exercised, the bulk of which will come from TeliaSonera’s stake.

After the completion of the IPO, Russian billionaire Alisher Usmanov will continue to hold more than 50% of the company through his AF Telecom unit, while TeliaSonera will cuts its 35.6% stake to a long-term strategic ownership of at least 25% plus one share.
 
“We are happy to have reached this stage of the process and expect to receive proceeds of SEK 9 billion to SEK 11 billion ($1.3 to $1.6 billion) following a successful completion of the IPO”, said Lars Nyberg, president and CEO of TeliaSonera.

Analysts expect the IPO to be priced at the lower end of the range given market conditions.

MegaFon had originally planned to hold the listing in October, but was forced to delay because it had not received approval from the UK Listing Authority.

This was due to concerns that Goldman Sachs, the lead bank on the offering, had pulled out days before it was due to begin, according to the Financial Times.

“Compared with the other big three operators in Russia, Megafon possess several competitive advantages. It holds a leadership position in the development of next generation mobile networks, while the vast majority of its user base is concentrated in Russia. Being concentrated in one market, means that it is not exposed to the same level of risk that rival operations such as MTS are subjected to,” said Alexey Volostnov, consultant for CEE/CIS region at Frost& Sullivan.