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Goldman Sachs Group Inc/The
Bank of America Corp
OAO MegaFon (MFON), Russia’s second-largest wireless carrier by customers, sought to reassure investors one day after making an initial public offering filing that revealed Goldman Sachs Group Inc. (GS) would no longer be on the share sale.
“Corporate governance is very important to MegaFon,” MegaFon spokesman Petr Lidov said by e-mail yesterday. “We decided to launch the IPO on October 9 and we are working with banks that were ready to go ahead with us on that date,” Lidov said.
Persistent uncertainty about MegaFon’s future ownership structure, coming as the company prepares to go public, is what led Goldman and MegaFon to part ways on the IPO, a person familiar with Goldman’s decision-making said, asking not to be identified because the process was private.
MegaFon’s majority shareholder is AF Telecom, controlled by billionaire Alisher Usmanov. Usmanov has said in previous interviews that he planned to put his assets into an umbrella company, USM Holding, that would be jointly owned with his partners, Vladimir Skoch and Iranian-born accountant Farhad Moshiri.
Umbrella companies are common ownership vehicles in Russia, where they are used by other businessmen such as Mikhail Fridman, Oleg Deripaska, Victor Vekselberg and Mikhail Prokhorov.
Skoch and Moshiri may get as much as 30 percent and 10 percent of USM, respectively. That said, Usmanov has yet to announce a final decision on the umbrella company set to retain a major stake in MegaFon, which means the wireless carrier’s shareholder structure remains unclear.
The U.K. Listings Authority, one arm of the Financial Services Authority, requires that all companies meet its criteria before they list, and continue to do so once they are listed. One of those criteria is demonstrating the ultimate ownership of any U.K.-listed company, which a sophisticated structure like an umbrella company can obscure. Still, MegaFon’s current ownership is clear, and plans for a change of control do not necessarily present a problem under U.K. rules.
“Our majority shareholder will represent only a minority of three board directors, with the majority comprising two independent directors and two representatives of TeliaSonera,” Lidov said.
MegaFon’s second-largest shareholder, the Swedish telecommunications company TeliaSonera, said that it may reduce its 35.6 percent stake, while still maintaining at least a 25 percent interest in the company.
Companies are returning to the IPO market after months of low volumes during which market volatility caused by Europe’s sovereign debt crisis led investors to stay away from such offerings. Initial share sales in Europe, the Middle East and Africa have raised $6 billion this year, compared with $37 billion in the same period last year, according to data compiled by Bloomberg.
Goldman has worked with Usmanov on other deals, including co-leading the $912 million IPO of his Internet firm Mail.ru in 2010.
Still, the bank has struggled to maintain a consistent presence in Russia after opening its first office in Moscow in 1994. Goldman named Paolo Zannoni, former chairman of Italian investment banking, to head its Russian operations in February, the third leadership change in as many years.
In 2009, United Co Rusal Plc (486) hired Bank of America (BAC) Merrill Lynch, the biggest U.S. bank by assets, to replace Goldman in marketing its IPO, two people familiar with the situation said at the time.
In the case of MegaFon, Goldman came to the process later than the other banks, and its legal team was slowing the process down, so it did not retain its role, a person familiar with MegaFon’s point of view said, asking not to be identified because the process is private.
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