Russia's MegaFon puts IPO road show on ice

By bne IntelliNews October 22, 2012

bne -

Russia's drive to empty its pipeline of IPOs spluttered again on October 22 as mobile operator Megafon suspended plans to launch a road show for a float in London and Moscow.

The company hasn't pulled the IPO completely, according to reports, but the sale has been delayed "indefinitely". Instead, it says it needs more time to prepare is prospectus and claims that demand for the shares are "exceptional" according to Bloomberg. The road show was initially slated to start today and the IPO to follow in early November.

However, after the failure of Promsvyazbank (PSB) to fill its order book in last week's IPO effort, Russia watchers worry if there is enough demand to sustain more listings. State-controlled giant Sberbank got the ball rolling in September with a 7.6% placement, raising $5.2bn. That was followed by a successful IPO from health services company MD Medical Group shortly after.

Some analysts argue that the PSB float failed because the price was too high - the bank was valued with a price to book multiple of 1.1 against the sector average of about 0.8 - and because the return on equity ratio was a modest 13%. However, others believe a simple lack of demand for Russian stocks was behind the flop.

In theory MegaFon should be an attractive offer as it is the last of the three big operators to go public. However the company said it is indefinitely delaying the road show in Moscow and London because it now wants to wait until after its financial results for July-September are released.

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