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MegaFon Said to Receive Orders to Cover IPO in London

November 26, 2012

OAO MegaFon (MFON), Russia’s second-largest mobile-phone operator, has received orders for all the shares of its initial public offering, said people with knowledge of the matter.

Orders came in at the lower half of the initial price range of $20 to $25, the people said, adding that more orders were expected to be confirmed as U.S. investors return from Thanksgiving holiday today. Trading of shares will begin Nov. 28 in London and Moscow. The MegaFon IPO was set to raise at least $1.7 billion, according to a MegaFon statement on Nov. 15.

Megafon had postponed an IPO marketing campaign in October, raising investor speculation the demand may have trailed expectations. IPOs have raised less than a third of the amount in 2011 as equities fell out of favor amid the sovereign debt crisis in Europe, data compiled by Bloomberg show.

The sale is a part of a shareholder agreement reached in April with Alisher Usmanov, the Russian billionaire who controls Moscow-based MegaFon, to resolve disputes between Stockholm- based TeliaSonera and the venture’s local owners. Usmanov will retain his 50 percent holding, while TeliaSonera will keep at least 25 percent, MegaFon said this month.

Telefonica IPO

The IPO, which may be the largest in Russia since that of United Co. Rusal’s in 2010, will have a 10 percent so-called over-allotment option to cover extra demand, Megafon said on Nov. 15. MegaFon and investor TeliaSonera AB are selling a combined 15 percent stake through the transaction.

Morgan Stanley (MS:US) and OAO Sberbank are managing MegaFon’s share sale, with help from Credit Suisse Group AG, Citigroup Inc. and VTB Capital.

In October, Telefonica Deutschland Holding AG, the German unit of Spain’s biggest phone company, raised 1.5 billion euros ($1.95 billion) in Europe’s largest IPO this year, according to Bloomberg data.

To contact the reporters on this story: Ilya Khrennikov in Moscow at; Ruth David in London at; Jason Corcoran in Moscow at

To contact the editors responsible for this story: Jacqueline Simmons at; Chris V. Nicholson at

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