Kcell succeeds with London IPO

 
Tim Wallace
Follow Tim
LONDON saw another successful listing from central Asia as Kazakhstan telecoms firm Kcell’s initial public offering (IPO) priced yesterday.

The deal came in at the bottom end of the price range, with the global depository receipts (GDRs) in London coming in at $10.50, pricing the 25 per cent stake in the firm at $525m (£324.7m) and the business as a whole at $2.1bn. The range was previously set at $10.50 to $13.00.

But sources close to the deal insisted demand was high, and the seller, owner TeliaSonera, is happy with the price.

“The deal went extremely well, it is an amazing success – we have close to 200 investors participating, more than two-thirds of them from outside Kazakhstan,” the source told City A.M. “There was a temptation to raise the price, but we want to allocate to high quality buyers and to allow for market performance.”

That market performance will begin to be tested today when the shares are traded on the Kazakh market, before trading begins in London on 17 December. But some conditional trading began yesterday, with shares edging up.

Russian, UK and US investors made up the largest groups of investors outside Kazakhstan, alongside a small number of continental Europeans.

Hedge funds and others with a “long only” outlook are believed to have invested, which those close to the deal see as a vote of confidence in the firm, particularly given such investors’ usual preference for larger, more liquid IPOs.

The listing follows London IPOs from Russian Sberbank and telecoms firm MegaFon. The flood of IPOs from the region has come as sellers seek bigger markets, as well as the reassurance investors want from tough governance rules in the UK.

ADVISERS KCELL’S INITIAL PUBLIC OFFERING

UBS
GLOBAL COORDINATOR

CREDIT SUISSE
GLOBAL COORDINATOR

VISOR CAPITAL
DOMESTIC BOOKRUNNER

Swiss banks UBS and Credit Suisse lead the international drive on Kcell’s initial public offering (IPO), which includes roadshows in London, Europe and New York. They are believed to have held eight or nine meetings and conference calls on each of those days, gaining the interest of almost 200 investors, leaving the deal firmly oversubscribed.

The pair were joined by Kazakhstan’s Visor Capital, partly because Kcell is a national champion, and partly because the listing is joint London and Kazakhstan, so Visor led the domestic offer.

Those joint global co-ordinators were joined by Renaissance Capital, which steps in as joint bookrunner, and Halyk Finance, which was a co-manager on the global offer.

UBS’s technology, media and telecoms team was involved in the offer, using their experience of the sector rather than of Kazakhstan to sell the stock.

Meanwhile Credit Suisse has recent experience with joint London listings from the same region – it was a joint global coordinator and joint global bookrunner on the Sberbank IPO earlier this Autumn.