UPDATE 3-Two Spanish firms prepare stock debut as economy improves

Wed Apr 2, 2014 10:20am EDT

(Adds eDreams Odigeo final price, context on other listings, analyst comment)

By Freya Berry and Robert Hetz

MADRID, April 2 (Reuters) - Two Spanish companies are preparing to become the first to launch on Spain's stock market since 2011, providing further evidence of a tentative economic recovery after a deep recession.

Corporate testing and inspection company Applus+ said on Wednesday it aims to raise at least 300 million euros ($413.8 million) in its debut share sale.

Online travel reservations firm eDreams Odigeo is also selling 370 million euros of shares, including 50 million euros in new shares, and books on the offering closed on Wednesday, sources close to the process said.

Spain, which came close to requesting an international rescue in 2012, is slowly emerging from a long recession and foreign investors have started betting on Spanish banks and companies again, despite stubbornly high unemployment.

"It's another boost for Spain's financial market," said Daniel Pingarron, an analyst at brokerage IG in Madrid.

"Some months ago we started noticing that foreign investors were returning, first to the debt market, then to the property sector and now also to the stock market."

Spain's once-booming real estate market crashed in 2008, sending developers to the wall and leaving banks lumbered with repossessed housing and soured loans.

Some lenders needed state bail-outs, including Bankia , which was rescued in 2012 less than a year after its initial public offering (IPO). Hundreds of thousands of ordinary Spaniards who had bought Bankia shares lost money.

No Spanish company has attempted an IPO since mid-2011.

But several real estate investment funds - listed vehicles that are only just taking off in Spain - have raised money in stock market flotations in recent weeks, attracting prominent investors such as U.S billionaire George Soros and bond fund Pimco.

The state also started selling down its majority stake in Bankia, earlier than many bankers and investors had expected, and it turned a small profit through a share offering in February.

Other rescued lenders are now also eyeing the stock market, and state-backed Banco Mare Nostrum (BMN) said on Wednesday it would start working on a flotation as of next year.

"There will be appetite and capital from foreign investors, we are already seeing it as there people approaching us with enquiries," BMN's Chairman Carlos Egea told journalists on the sidelines of an event in Madrid.

Spain's index of 35 most-traded companies has gained 5.5 percent so far this year, after rising 21 percent in 2013.

BACK ON TRACK

Applus+, which is controlled by private equity firm Carlyle , said it will use the money from its flotation mainly to pay off debt and to fund further expansion.

EDreams Odigeo, meanwhile, is expected to price its IPO at 10.25 euros a share, a source familiar with the matter said on Wednesday, valuing the company at 1.075 billion euros.

In both cases shares are being sold to institutional investors.

Spain is trying to get its indebted economy back on track, after it emerged from two-year recession in the second half of last year, and the government is forecasting growth of 1 percent in 2014.

The number of jobless in Spain fell in March for the second straight month and the workforce grew.

Still, the jobless level remains among the highest in the European Union and the government just missed its budget deficit target of 6.6 percent of GDP for 2013. It has promised to cut the shortfall to 3 percent by 2016.

Many Spaniards say they have not seen any economic improvement but an improved corporate outlook should help job creation and boost tax revenues.

Applus+ did not specify how much total proceeds of the sale were likely to be.

A source told Reuters last month that the company is targeting a valuation of approximately 2.2 billion euros. . The company has financial debts with banks of about 900 million euros.

Applus+ provides services for the energy, infrastructure and automotive sectors to manage risk, quality and safety. It reported revenue of 1.6 billion euros and gross operating profit of 200 million euros for 2013 and employed 19,000 staff.

The process still requires the approval of Spain's stock market commission and the publication of a prospectus. Morgan Stanley and UBS are joint global coordinators.

($1 = 0.7249 Euros) (Additional reporting by Jesus Aguado, Writing by Elisabeth O'Leary and Sarah White; Editing by Anna Willard)