You're reading: MegaFon raises $1.7 billion in Moscow, London IPO

MOSCOW — MegaFon, Russia's second-largest mobile phone operator, raised $1.7 billion in its initial public offering in Moscow and London Wednesday in the biggest floatation by a Russian company in three years.

MegaFon, the last of Russia’s
big three mobile companies to hold an IPO, said on Wednesday that it
had sold 15 percent of its stock at $20 a share — at the bottom end of
its target range. The flotation values the company below analyst
expectations at $11.1 billion.

MegaFon stock will be traded in the form of shares in Moscow and global depositary receipts in London. The Moscow-based company’s listing is the biggest by a Russian company since aluminum producer Rusal went public in Hong Kong in 2009, raising $2.2 billion.

MegaFon, which is largely focused on the Russian market, is controlled by a holding company of Russian tycoon Alisher Usmanov which owns 55.8 percent, while Sweden’s TeliaSonera has 29 percent. Usmanov is Russia’s richest man, estimated to be worth $18 billion.

Despite
the IPO missing expectations, chief executive Ivan Tavrin hailed it as
“a clear endorsement of MegaFon’s investment case” which “reflects
investor appetite for the Russian mobile data growth story.”

The
IPO has not been without its problems: in October the flotation was
put on hold after Goldman Sachs quit as a key bookrunner in the deal.
Rating agency Standard & Poor’s last week took the company off its
negative watch, but confirmed a negative outlook, meaning that a
downgrade is possible if the company’s governance practices threaten its
performance.