* Shares in cable operator Com Hem rise as much as 11 pct
* IPO price implies EV of 8.9 times 2015 EBITDA
(Adds shares, detail)
By Sven Nordenstam
STOCKHOLM, June 17 Shares in cable operator Com
Hem rose as much as 11 percent at their market debut
in Sweden's largest initial public offering (IPO) for 14 years,
as investors were lured by a promise of hefty dividends and a
return to revenue growth.
Com Hem is the seventh IPO on the main market of the
Stockholm stock exchange after a two-and-a-half-year drought
that ended last November. All the new entrants except one have
outperformed the wider market by at least 10 percent.
In its IPO prospectus, Com Hem forecast a return to revenue
growth on the back of investments in its network. It plans to
distribute at least half of this year's free cash flow as
"We believe that we will be able to achieve mid-single-digit
revenue growth year on year in the medium term, which we believe
will translate into attractive equity free cash flow growth,"
the company said in the prospectus.
At 1012 GMT on Tuesday, shares in Sweden's largest cable
operator traded at 63.05 crowns, up 8.7 percent from the offer
price of 58 crowns which gave the firm a market capitalisation
of 11.5 billion Swedish crowns ($1.7 billion). The IPO price was
near the top end of initial guidance of 44-62 crowns per share.
The initial rise in the shares is not stellar by Nordic
standards. Shares in ship fuel supplier OW Bunker and
outsourcing firm ISS jumped 21 and 14 percent
respectively on their opening days in Copenhagen in March.
Com Hem raised 5.67 billion Swedish crowns ($853 million) by
selling new shares in the offering, the second-largest in the
Nordic region this year after ISS and Sweden's biggest offering
There is an over-allotment option, meaning Com Hem may raise
an additional 567 million crowns.
"The offering was over-subscribed several times and
attracted strong interest among Swedish and international
institutional investors as well as Swedish retail investors,"
the company said.
The company has said it will have net debt of around 9.5
billion crowns after the offering. This means the 58-crown share
price implies an enterprise value of around 8.9 times 2015
earnings before interest, tax, depreciation and amortisation
(EBITDA) as forecast by Nordea analysts in a research note.
That is higher than the 8.2 multiple for U.S. cable group
Liberty Global, but in line with Belgium's Telenet
, which trades at 9.2 times 2015 forecast EBITDA,
according to Thomson Reuters data.
JP Morgan, Morgan Stanley and Nordea were joint global
coordinators in the IPO. Rothschild was financial adviser to the
company and its owners.
Private equity firm BC Partners, which bought Com
Hem in 2011, will have a 50 percent stake in the firm, assuming
the over-allotment option is not exercised.
The European cable sector has seen a frenzy of deals in the
past year as telecom operators and cable firms combine to bundle
However, Nordea analysts said Com Hem looked unlikely to be
bought in coming years. This was partly because local telecom
operators would have to make too large antitrust concessions in
a deal. Bundling of communications services, called convergence,
has not yet caught on in the Nordic region, Nordea noted.
($1 = 6.6448 Swedish crowns)
(Editing by Erica Billingham and Tom Pfeiffer)