UPDATE 2-Danish services firm ISS revives share float plan to raise $1.5 bln

Tue Feb 18, 2014 8:46am EST

* Denmark's ISS aims to be listed on Copenhagen Stock Exchange

* Nordea, Goldman Sachs and UBS will be joint global coordinators

By Ole Mikkelsen

COPENHAGEN, Feb 18 (Reuters) - Danish business services firm ISS is planning a return to the Copenhagen stock market with an initial public offer aimed at raising 8 billion crowns ($1.47 billion)for the company, its third attempt at an IPO since it was bought by private equity investors nine years ago.

The proceeds will be used to bring down the company's net debt, which stood at 22.7 billion crowns ($4.2 billion) at the end of 2013, and will make it the second biggest IPO in the Nordics since Norwegian insurer Gjensidige Forsikring raised $1.87 billion in 2010.

Funds managed by Swedish private equity firm EQT and by Goldman Sachs bought ISS for 22.1 billion Danish crowns ($4.05 billion) and delisted it from the Copenhagen bourse in 2005.

ISS said a partial sell-down of their shares was expected under the IPO but did not quantify their intentions.

EQT and Goldman Sachs together hold 73 percent of ISS after the Ontario Teachers' Pension Plan (OTTP) and KIRKBI, which invests funds from the family behind Lego toys, injected 500 million euros ($685 million) for a combined 26 percent stake in 2012. Neither of these investors intends to sell shares in the IPO, ISS said.

"The intended IPO is expected to support our operational strategy, advance our public and commercial profile provide us with improved access to public capital markets and a diversified base of new private and institutional shareholders," Chief Excecutive Jeff Gravenhorst said.

The company also said on Tuesday its earnings before interest, taxes, depreciation and amortisation were unchanged last year at 5 billion crowns on revenue down 1.3 percent at 78.5 billion crowns, due to non-core divestments and adverse exchange rates, with underlying organic growth running at 4.3 percent.

PREVIOUS ATTEMPTS

Plans to list ISS in 2007 and again in 2011 were both dropped because of difficult market conditions.

The company cancelled the IPO in 2011 six days after the devastating Tohoku earthquake off Japan brought renewed uncertainty and volatility to global financial markets.

An agreed 5.2 billion-pound ($8.69 billion) cash and shares bid by British security services group G4S was then abandoned in November 2011 due to resistance from G4S's shareholders. At the time the deal had valued the company at 130 Danish crowns a share.

"I see a good chance that the IPO will be successful this time. It is a completely different company and the financial environment is different from what we saw in 2011," analyst Janne Vincent Kjaer from Jyske Bank said.

Danish pension fund ATP, which ranks among the largest pension investors in Europe with assets worth more than 500 billion crowns, said it might be interested in the offer.

"We will take a look and decide if the pricing is attractive enough to make it interesting for us to participate," head of equities Claus Wiinblad said.

Peers such as G4S have an enterprise value of around 10 times EBITDA according to Thomson Reuters data, a multiple that would value ISS at roughly 50 billion Danish crowns ($9.1 billion), including debt.

Share analyst Soren Lontoft Hansen from Sydbank estimates the enterprise value to be between $8.5 and $9.7 billion.

"We have positive equity market conditions and a low interest rate level provides an appetite for equities and that fuels the IPO market," Lontoft said.

Nordea, Goldman Sachs and UBS Investment Bank have been appointed to act as global coordinators and as bookrunners along with Barclays and Morgan Stanley, while Carnegie, Danske Bank and SEB have been appointed as Co-lead managers. Lazard is acting as financial advisor.

No date for the offer has been set but Gravenhorst told reporters on a conference call that the final decision to go ahead would be made before the end of March.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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