* Pricing expected in lower half of range -source
* Bankers play down concerns deal could still go off-track
* MegaFon expected to finalise placement Tuesday night
* Order for $280 mln of stock by global investment fund
MOSCOW, Nov 26 Books on the international stock
market float of MegaFon, Russia's second-largest
mobile phone firm, were covered on Monday a day ahead of time,
helped by a large order from a global investment fund, sources
"The book is oversubscribed," said one source close to the
deal, adding that the initial public offering appeared likely to
be finally priced in the lower half of the range.
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 business at $11.2 billion to $14.0
The listing would establish MegaFon as an alternative to New
York-listed Russia market players MTS and VimpelCom Ltd
, as it seeks to lure investors with a pledge to pay a
chunky 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 issue
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.
Bankers sought to play down concerns the deal could still go
off track: "There's no reason to get freaked out," another said.
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 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. 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 short-term traders.
Nordic telecoms group Teliasonera is selling down its 35.6
percent stake and MegaFon itself is selling treasury stock it
bought in an ownership restructuring last spring under which
Usmanov secured bare 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.