Goldman Sachs is a no-show on Megafon float

David Hellier
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GOLDMAN Sachs was yesterday desperately trying to douse the flames of an argument that threatens to jeopardise its business in Russia after stepping back from the London flotation of Megafon.

Bankers were yesterday caught on the hop by news that Goldman Sachs, which had been effectively in the driving seat in the run-up to the flotation plans, was not on the roster of bank advisers when Megafon’s intention to float statement came out yesterday. Morgan Stanley and Sberbank have been appointed joint global coordinators and joint bookrunners instead, with Citi, Credit Suisse and VTB Capital also involved.

“Clearly there’s been some sort of problem because Goldman was a shoe-in for this deal,” said one banker.

Sources familiar with the situation said that Goldman Sachs decided to withdraw around two weeks ago when it became clear that Megafon’s controller Alisher Usmanov intended to set up an umbrella company that would hold stakes in Megafon, along with other assets he has stakes in such as Arsenal Football Club and Metalloinvest.

Goldman Sachs has acted for an Usmanov-inspired IPO in the past. The bank joined JP Morgan to lead the flotation of Mail.Ru, the largest internet group in the Russian-speaking world, two years ago.

Neither Goldman nor Megafon would comment on the investment bank’s surprise omission but sources said that there was a phone call between the company and the bank yesterday, in which both sides agreed not to brief against each other. The IPO will give UK and investors the chance to buy into a Russian-focused phone company.

The size of the sale is likely to be around a 15 percent stake, a source familiar with the matter said. This is smaller than the 20 percent originally expected, showing that MegaFon is financially strong and does not need to raise much capital buty could also reflect the subdued appetite in the listings markets at the moment.