Ziggo brings a ray of sunshine to IPO market

 
David Hellier
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ALONG with the sunshine came a hint of optimism about the future of the faltering IPO market yesterday as the Dutch cable group Ziggo revealed there was sufficient demand for its upcoming £550m share issue.

Private equity owners Cinven and Warburg Pincus, advised by STJ Advisors, are selling 35m secondary shares with guidance of €16.50 to €18.50 per share. That will give a free-float of 17.5 per cent, extending to 20.125 per cent if a 15 per cent optional allotment is exercised.

Under normal circumstances there would be nothing unusual about such an offering, nor would there be nervousness about whether it might go ahead. Yet these are not ordinary times. The markets have been so dormant of late that something like this has bankers dreaming of more to come.

Ziggo is floating in Amsterdam but that doesn’t stop hopes rising of action eventually in London, where the door has been bolted on new issues (with the odd exception) ever since the Glencore flotation last year.

“This is another clear message that the IPO market is open, provided due care and attention are taken,” says Rupert Hume-Kendall, chairman of global capital markets at BofA Merrill Lynch, who worked on the successful fast-tracked Ruspetro float in London earlier this year. “The fast track approach also seems quite popular alongside realistic pricing,” he adds.

According to IFR, the deal is being sensibly priced. IFR says that at the mid-point of the range, Ziggo is being sold at an earnings multiple of about 7.5 times, with peers Telenet and KDG at about eight times and nine times respectively.

In other words, the stock is being issued at a relative discount to the company’s peers in the sector. Which is a good thing, given that so much of the breakdown in the UK market has been blamed on unrealistic pricing on the part of the private equity sellers.

JP Morgan and Morgan Stanley are joint global co-ordinators and joint bookrunners with Deutsche Bank and UBS.

With Switzerland’s Asian-focused outsourcing group DKSH also heading towards an imminent flotation, there are hopes that some of the other deals that have been waiting on the runway for some time might get off the ground.

One is the flotation of the German chemicals maker Evonik, a deal so attractive that Goldman Sachs supremo Lloyd Blankfein turned out for the original pitch last year. Yesterday buyout group CVC, a big investor in Evonik, hinted that there could be a listing by the end of June.

There are signs that confidence is returning to the IPO market, but that doesn’t mean its revival will be easy.
david.hellier@cityam.com