Cellular provider Cellcom's initial public offering on Wall Street Monday night was wildly successful. Oversubscription boosted the offer from controling shareholders by about a million shares, meaning they sold 20 million shares at $20 a piece, or $400 million.

That price is 11 percent higher than the upper limit of the range in the draft prospectus, which had aimed for $18.

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The share price puts Cellcom's market capitalization at $1.95 billion compared to the $1.56-1.75 billion value that had been projected. The underwriters also still hold a greenshoe option for three million additional shares. Investment banks Goldman Sachs, Citigroup and Deutsche Bank led the offering.

Discount Investments of the IDB group had an almost 80 percent stake in Cellcom and sold over 19 million shares, while Goldman Sachs had a 5 percent stake and sold almost 1 million shares. Discount Investments will pocket $353 million and is expected to post net profits of NIS 660 million in its 2007 first quarter reports.

The public offering diluted Discount Investments from 78.5 percent of the cellular provider to 59 percent, and the stake could shrink to 56 percent if the underwriters exercise the greenshoe. But that would also translate into another $53 million consideration and not profits of NIS 100 million.

Discount Investments, a subsidiary of Nochi Dankner's IDB Development, took over control of Cellcom for $1.34 billion in 2005. The holding company bought out BellSouth according to a value of $1.8 billion, while the Safra family held out for a value of $2.07 billion. The company later distributed a $750 million dividend.

As this is a shareholders offering, all the money raised in the public offering is directed to them, and the company will not benefit from a capital injection. Cellcom will trade on the big board under the ticker symbol CEL. The high value set in the IPO will also benefit other shareholders: Bank Leumi, which had a 5 percent stake in the company prior to the IPO, insurer Migdal which had a 4 percent stake, and First International Bank that had 2 percent of the cell phone company.

Nochi Dankner, IDB chair, said the success of the Cellcom issue and the great public confidence expressed in heavy demand for its shares is part of the group's efforts to add value to its shareholders while maintaining control of its strategic holdings.

"The fantastic demand won by Cellcom shares indicates investor confidence in the company as the leading cellular provider in Israel," Cellcom CEO Amos Shapira said. "The success is not only in the vote of confidence in Cellcom and the Israeli economy, but also in defining the expectation that the Israeli communications sector will continue to develop on the foundations of fair competition and bringing value to investors."

In the prospectus, Cellcom reported NIS 5.6 billion revenues in 2006, compared to NIS 5.114 billion in 2005, which represents almost 10 percent growth. Operating profits for 2006 are expected to amount to NIS 965-975 million, compared to NIS 702 million in the preceding year, an increase of 38 percent. Average revenue per subscriber - a key business parameter in the communications sector - will be NIS 150-151 in 2006, as it was in 2005. However, the average number of monthly minutes used will increase for 2006 to 338 minutes of airtime, compared to 321 minutes in 2005.

Cellcom chairman Ami Arel and Shapira are both worth $3.3 million more on paper today than they were last week. In September, Cellcom's board approved a new options plan for several senior executives prior to the offering. Arel and Shapiro each received packages of about 450,000 options at a strike price of $12.6. At Monday night's $20 price, the options are worth $6.6 million. Both men must complete a certain period of employment with the company and the packages are split into four periods of eligibility.