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. Last Updated: 07/27/2016

MMK Shares Drop After IPO

Shares in steelmaker MMK dropped sharply in Moscow on Tuesday after its London IPO was priced below the market, but were snapped up by investors keen for exposure to the country's steel sector.

MMK, an acronym for Magnitogorsk Iron & Steel Works, said the issue in London and Moscow was two times oversubscribed and raised $1 billion, valuing the company at $11.22 billion.

MMK shares were down 7.12 percent on Moscow's RTS exchange at 97 cents and 6.32 percent at 25.1 roubles (97 cents) on MICEX in early trading.

Earlier Tuesday, the company priced its IPO at 96 cents per share, below Monday's RTS close of $1.04 and near the bottom of an indicative price range of 94 cents to $1.19 per ordinary share.

Bankers involved in the IPO had valued MMK at $9.7 billion to $13.6 billion, based on its existing market capitalization of over $11 billion.

MMK, majority owned by chairman Viktor Rashnikov, one of Russia's richest men, ranks 20th in the world in terms of output. It plans to use proceeds from the IPO toward financing its investment plan for 2007-2013 worth $5.2 billion.

The issue was placed with institutional investors, predominantly in Britain and continental Europe. Demand from Russian institutional investors at the offer price was also allocated in full.