* Order book said to be oversubscribed
* Global fund cited as large buyer
* Seen pricing in lower half of range
MOSCOW, Nov 27 The order book for the initial
public offering (IPO) of MegaFon, Russia's No.2
mobile phone firm, will close at 1400 GMT on Tuesday amid signs
of solid investor demand, sources familiar with the offering
Sources on Monday said the deal was already oversubscribed
and indicated the placement was likely to be priced in the lower
half of the offer range.
Late orders could nudge up the final price, one source said
MegaFon, controlled by Russia's richest man, Alisher
Usmanov, is selling global depositary receipts in London and
Moscow at $20-$25, potentially raising $1.7 billion to $2.3
billion and valuing the firm at $11.2 billion to $14 billion.
The listing would establish MegaFon as an alternative to New
York-listed Russia market players MTS and VimpelCom Ltd
. It has been seeking to lure investors with a
prospective dividend yield of 7-8 percent.
Questions about corporate governance, however, prompted
investment bank Goldman Sachs to drop out of the deal,
while the UK Listing Authority signed off on the prospectus only
after Usmanov pledged to keep overall control under a deal to
restructure his and his partners' assets.
The bookbuilding process, in which MegaFon and its bankers
pitched to investors in New York, London, Moscow and elsewhere
to drum up orders, was also slowed down by the U.S. Thanksgiving
holiday last week.
The deal received a boost after a large global investment
fund placed an order for around $280 million worth of MegaFon
stock, or more than a tenth of the issue, three sources said on
One source close to the deal called the quality of the order
book "strong", with interest from long-only investors greater
than from hedge funds, and buying interest better than when
state-controlled Sberbank, Russia's top bank, recently
sold $5 billion in stock.
"I see a reasonable after-market," the source said,
referring to likely demand for the shares following the IPO.
If syndicate banks exercise an over-allotment option,
MegaFon would have a fairly small free float of 17 percent,
making it a more natural target for long-term investors than
Nordic telecoms group Teliasonera is selling down
its 35.6 percent stake to just over 25 percent. MegaFon itself
is selling treasury stock it bought in an ownership shakeup last
spring in which Usmanov secured majority control.
MegaFon is expected to finalise the placement on Tuesday
night, with pricing, allocations and trading to begin on
Morgan Stanley and Sberbank are acting as joint
coordinators, with Citigroup Inc, Credit Suisse
and VTB as joint bookrunners.