MEGAFON, the mobile telecoms group controlled by Russia’s richest man, Alisher Usmanov, became the second largest share offering in Europe this year as it raised $1.7bn (£1.06bn) yesterday in London and Moscow despite concerns which had earlier led Goldman Sachs to step aside from the deal.
The deal was assisted in its final stages by one investment group, believed to be US based, buying one tenth of the shares being issued in the IPO, say banking sources.
In an on-off deal that has been knocked sideways by Goldman’s decision before an October roadshow to step aside from the banking syndicate, the company’s remaining advisers have been forced to address scepticism about the structure of the group post flotation.
Goldman highlighted concerns about the structure of an umbrella group in which Usmanov holds 60 per cent of the shares, with two associates owning the remainder. In the prospectus, it emerges that Usmanov will have voting rights over all the shares in the company, which will own Megafon, the tycoon’s shareholding in Arsenal and other assets.
Shares were priced at $20 each, at the lowest end of the range, but that didn’t stop them falling slightly to around $19.79 at the close yesterday.
Despite the slightly disappointing start to trading, Alastair Walmsley, director of equity primary markets at London Stock Exchange, was delighted to have got the issue off the ground: “MegaFon is another fantastic win for London. It is our largest telecoms offering for over ten years. “
“There will be lots of investors only too happy to pick up shares at a low entry point,” says Luis Saenz, head of equity trading at BCS Financial Group.
Since Megafon is issuing global depositary receipts in London it will not be traded in the FTSE indices, making it independent of tracker funds.
WHITE & CASE
The Megafon bumper IPO has come like an early Christmas present for City advisers, who have lived through one of the most barren periods of recent years in terms of bids and deals both in the UK and elsewhere in Europe.
Morgan Stanley and Sberbank were the two lead banks on the deal, standing by their client after Goldman Sachs stepped aside at a crucial stage, citing corporate governance concerns.
“Goldman threw their client under a bus,” said one of the large number of advisers who stayed the course yesterday.
Morgan Stanley’s team of bankers was a large team effort led by Gergely Voros out of the group’s Moscow office and Henrik Gobel, head of equity capital markets for EMEA.
Voros has 13 years of investment banking experience in Russia and the CIS and has led the origination and execution of some of the biggest capital raisings in the region including, among others, the IPOs of Rosneft, Evraz Group, MMK and Eurasian Natural Resources Corp.
Credit Suisse, Citi and VTB were also part of the syndicate, with Michael Sherwood of Goldman Sachs just an onlooker after withdrawing from the deal at a crucial stage.
Megafon was also advised by legal teams from Cleary Gottlieb and Freshfields.
Minority shareholder TeliaSonera, one of the main sellers of shares in the deal, took advice from White & Case.
Of the five premium IPOs in London in 2012, White & Case has advised on three including RusPetro in January, MD Medical in October and today’s MegaFon transaction. The lead lawyers were Allan Taylor (pictured), Marcus Booth, and local partner Darina Lozovsky and associate Dmitry Lapshin.