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. Last Updated: 07/27/2016

AFI Development Raises $1.4Bln in London

AFI Development, a Russia-focused real estate company and spinoff of global developers Africa Israel Investment, has raised $1.4 billion in an initial public offering on the London Stock Exchange.

AFI said it priced its offering at $14 per global depositary receipt, above its initial price range of $10 to $13.

The IPO on Thursday valued the firm at $7.3 billion before the exercise of the over-allotment option.

With AFI's share price dropping by 8.6 percent initially, some analysts said it showed the fragility of interest in the Russian real estate sector.

"Overall, the offering reflects the dangers of being overly aggressive in terms of pricing; demand at $14 per share was apparently not as strong as the underwriters thought," said Kim Iskyan, joint head of research at UralSib Capital.

AFI Development said it intended to use the proceeds to fund its current project portfolio and to acquire new projects in Moscow, the Moscow region and other major cities across the country.

AFI has 21 development projects in 12 locations, the vast majority of which are in Moscow, according to UralSib. Almost half of the projects are in the office sector, with 19 percent in residential and 13 percent in retail.