Russia's MegaFon closes in on $4 billion London IPO

Tue Sep 4, 2012 8:49am EDT
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By Megan Davies and Maria Kiselyova

MOSCOW (Reuters) - MegaFon MGFON.UL, Russia's second-largest mobile phone operator, has asked its local regulator for permission to list its shares in London for what would be the world's biggest initial public offering since Facebook's (FB.O: Quote) in May.

The company, in which Russia's richest man Alisher Usmanov took control in a complex deal in April, is looking to float a 20 percent stake that could be worth as much as $4 billion, sources familiar with the matter have said.

The float would offer investors exposure to a firm that has positioned itself aggressively for the rollout of high-speed mobile data services loved by iPhone-toting urban Russians, and is backed by the impeccable Kremlin connections of Usmanov, whose fortune is estimated by Forbes magazine at $18.1 billion.

In a filing on Tuesday, MegaFon requested permission from Russia's financial markets regulator to list up to 123 million shares abroad, equivalent to 19.9 percent.

"We are considering the possibility of holding an IPO," MegaFon said in response to questions about the filing. "The timing of the public offering will depend on market conditions."

The dismal post-IPO performance of social network Facebook's $16 billion dollar offering has hit investor appetite for new stock offerings, though global stock markets have drifted higher through the summer, boosting the confidence of investors and new issuers alike.

"MegaFon's IPO is likely to be one of the few positive Russian stories due to the combination of healthy business growth and good corporate governance," said Tibor Bokor, a London-based analyst at ING.

If MegaFon gets the deal away, it would be the largest IPO by a Russian company since state bank VTB (VTBR.MM: Quote) raised $8 billion in 2007. Notable Russian IPOs since include aluminum group Rusal's (0486.HK: Quote) $2.2 billion listing in Hong Kong in 2010 and internet search engine Yandex's (YNDX.O: Quote) $1.4 billion float on the U.S. Nasdaq exchange in May 2011.   Continued...

The logo of Russian mobile operator Megafon is seen from the roof of a residential building in Moscow April 25, 2012. REUTERS/Maxim Shemetov