Investors considering the planned initial share sale of OAO MegaFon (MFON) have asked for valuations of between $10 billion and $11 billion for Russia’s second-largest mobile-phone operator, people familiar with the plans said.
The company would find more than enough demand at $10 billion, a discount to listed peer Mobile Telesystems OJSC (MBT) at the implied valuations, said two of the people, who asked not to be named because they were not authorized to speak to the media.
MegaFon, controlled by Russia’s richest man, Alisher Usmanov, and partially owned by Sweden’s TeliaSonera AB (TLSN), should trade at a fair value of between about $12 billion and $16 billion, analysts at banks involved in the IPO said in notes to investors. Direct Line Insurance Group Plc also priced its IPO at a discount to the initial trading estimates for the company.
“We think the MegaFon story, if valued attractively, may attract investor interest as an alternative to listed Russian telcos,” analysts led by Alexander Kazbegi at Renaissance Capital Holdings Ltd. said in an Oct. 10 note to clients.
Russian companies are returning to stock offerings after the central bank sold a $5.2 billion stake in Sberbank last month. MD Medical Group Investments Plc, Russia’s largest chain of maternity centers, raised $311 million in a London IPO last week. The billionaire Ananiev brothers’ OAO Promsvyazbank had sought to raise as much as $414 million in a London sale before postponing the deal yesterday, saying pricing indications didn’t reflect the company’s value.
An official at Moscow-based MegaFon declined to comment on the IPO valuation.
MegaFon said yesterday it agreed to buy a 25 percent stake of handset retailer Euroset Holding NV, and secured an option to acquire another 25 percent from Usmanov as soon as one year from now. The 50 percent holding is valued at $1.33 billion, the company said. VimpelCom Ltd. (VIP) will continue to own the remaining 50 percent stake.
MegaFon this month announced plans to push ahead with a share sale in which TeliaSonera will reduce its stake, with MegaFon also selling its own stock. It may offer investors as much as 20 percent of its shares, including 10.6 percent from TeliaSonera’s stake and 9.4 percent held by a MegaFon unit, according to a shareholder agreement reached in April when billionaire Mikhail Fridman’s Altimo cashed out of MegaFon.
Altimo sold its 25 percent stake in MegaFon for almost $4 billion in cash, valuing the company at $15.9 billion, according to data compiled by Bloomberg and based on TeliaSonera’s statement. The company also paid $5.2 billion in dividends in April as Fridman exited and Usmanov gained control of the operator.
Initial share sales in Europe, the Middle East and Africa have raised $8 billion this year, compared with $37 billion in the same period last year, data compiled by Bloomberg show.
Telefonica SA (TEF) said today it will sell as much as a 23.17 percent stake in its German unit, Telefonica Deutschland Holding AG, at 5.25 euros to 6.50 euros apiece. At the high end of the range, Spain’s former phone monopoly may raise 1.68 billion euros ($2.2 billion) from the IPO. Madrid-based Telefonica had more than 58 billion euros in net debt at the end of June.