advisers to Alisher Usmanov’s mobile telecoms group Megafon were last night expected to price the group’s shares at the bottom of a guided range, valuing it at around £7bn, in what is one of the largest share issues this year on the London market.
Megafon is Russia’s second largest mobile phone group, controlled by Usmanov, one of the country’s richest men. It is selling global depositary receipts (GDRs) in London and Moscow, offering an alternative to New York-listed Russian market players MTS and Vimpelcom.
The company set a range of $20-$25 per GDR, to raise $1.7bn (£1.06bn) to $2.3bn, valuing the firm at between $11.2bn and $14bn. The flotation is the second largest of the year in terms of money raised on the London markets, behind the Russian bank Sberbank. It comes towards the end of an especially quiet time for London initial public offerings (IPOs), with the market suffering from a lack of trust between buyers and sellers and different types of advisers.
The Megafon issue itself was nearly derailed at the outset when Goldman Sachs stepped aside from the syndicate after becoming uncomfortable with changes to the ultimate ownership structure of the group.
Morgan Stanley and Sberbank persevered with the flotation, but there was a delay caused by the UK’s listing authority wanting to become comfortable with the altered arrangements.
Many thought Goldman’s action might prove fatal for the share issue but Megafon persevered, bolstering its chances of success recently with the appointment of former City minister Lord Myners to the group’s board.
The float received an important endorsement when the head of Nordic telecoms group Teliasonera, which is selling down its stake, signed up for Megafon stock, agreeing to buy $2m-worth of shares at the offer price.