MOSCOW (AP) -- Shares in MegaFon made a disappointing debut in a $1.7 billion initial public offering in Moscow and London Wednesday when Russia's second-largest mobile phone operator was forced to price its stock at the bottom end of its target.
MegaFon, the last of Russia's big three mobile companies to hold an IPO, said on Wednesday that it had sold 15 percent of its stock at $20 a share — at the bottom end of its range. The flotation values the company below analyst expectations at $11.1 billion.
The company's stock was down 1.7 percent, at $19.66 a share in midday trading on the London Stock Exchange.
MegaFon stock will be traded in the form of shares in Moscow and global depositary receipts in London. The Moscow-based company's listing is the biggest by a Russian company since aluminum producer Rusal went public in Hong Kong in 2009, raising $2.2 billion.
MegaFon, which is largely focused on the Russian market, is controlled by a holding company of Russian tycoon Alisher Usmanov which owns 55.8 percent, while Sweden's TeliaSonera has 29 percent. Usmanov is Russia's richest man, estimated to be worth $18 billion.
Despite the IPO's poor performance, chief executive Ivan Tavrin hailed it as "a clear endorsement of MegaFon's investment case" which "reflects investor appetite for the Russian mobile data growth story."
The IPO has not been without its problems: in October the flotation was put on hold after Goldman Sachs quit as a key bookrunner in the deal. Rating agency Standard & Poor's last week took the company off its negative watch, but confirmed a negative outlook, meaning that a downgrade is possible if the company's governance practices threaten its performance.