Telefonica Germany rises in first day of year’s biggest Europe IPO

City A.M. Reporter
SHARES in Spanish telecoms giant Telefonica’s O2-branded German unit rose in its first day in trading yesterday following Europe’s biggest initial public offering (IPO) in more than a year, adding to a fledgling recovery in the region’s new issues market.

The offering will raise as much as €1.45bn (£1.17bn) for Spain’s Telefonica to trim its huge debt pile, and is a positive step for an IPO market which has struggled for months amid Europe’s debt crisis and sluggish economic growth.

Telefonica said on Monday it was selling a 23 per cent stake in Germany’s smallest mobile operator, including an overallotment option, for €5.60 a share. The price was in the lower half of Telefonica’s original €5.25-€6.50 range, which it narrowed twice during bookbuilding.

Telefonica Deutschland shares began trading at €5.70 yesterday and rose to €5.80 by the end of trading, valuing the unit at around €6.4bn.

“We have seen a re-emergence of some sort of IPO market. The recent transactions, the fact they have gone well, is clearly presenting a positive backdrop,” said one banker not involved in the deal, referring to other recent listings such as Talanx and Direct Line.