MegaFon Beats IPO Price on MSCI Fast-Track Index Addition
OAO MegaFon (MFON) shares rebounded from yesterday’s losses after the biggest initial public offering from Russia in three years as MSCI Inc. (MSCI) said the stock qualifies for early entry to indexes tracked by investors.
The stock rallied 4.3 percent to $20.45 by 12:35 p.m. in London, erasing yesterday’s 2 percent drop and trading above its IPO price of $20. It rose as much as 4.6 percent earlier and the amount of shares traded was 4.6 million.
MegaFon’s global depositary receipts meet criteria for early entry into the Russia index, effective Dec. 12, MSCI said in an e-mailed report today. The mobile operator sold GDRs at the bottom of its $20 to $25 range to raise $1.7 billion in the biggest issue by a Russian company in three years. Alfa Bank analysts forecast as much as $300 million in fund inflows as a result of the MSCI inclusion, according to an e-mailed note.
“The impact of $400-500 million of passive inflows should not be underestimated,” Julian Rimmer, a trader at CF Global Trading UK in London, said by e-mail. Investors who didn’t sell yesterday “shall be rewarded,” he said.
MSCI will use GDRs instead of the Russian shares because of the lower trading volumes in Moscow, according to the note. The amount of shares traded in Moscow yesterday was 3,480, compared with 40.3 million in London, data compiled by Bloomberg data show.
MSCI will add 620 million MegaFon shares to the index, and the foreign inclusion factor will equal 0.14, according to the statement.
“The MSCI announcement today pushed investors to buy the stock so that the weighting of MegaFon in their portfolios is similar to that of the MSCI index,” Kirill Bagachenko, who manages about $3 billion in Russian equities at TKB BNP Paribas Investment Partners in St. Petersburg, said by phone.
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