* Price of 160 crowns per share at lower end of range
* Firm sells 2.3 mln new shares in first Prague IPO in 3
* Existing investors decide not to sell shares they had in
* Brewer to raise $20 mln for expansion of network,
(Adds manager comment, details)
By Jason Hovet
PRAGUE, May 23 Czech brewer Pivovary Lobkowicz
Group priced shares for its stock market listing well below the
maximum level previously stated, prompting existing investors to
hold on to their stock as they believe the offer undervalues the
In Prague's first initial public offering (IPO) in three
years, Lobkowicz set a price of 160 crowns per share. That
compared with a maximum of 175 crowns given for retail investors
at the start of bookbuilding.
The offer price - at the lower end of the range - led to
existing shareholders deciding not to sell the 3.4 million
shares they had in the offer.
The company, nevertheless, said it would raise 404.8 million
crowns ($20 million) by selling 2.3 million new shares plus an
additional 230,000 shares as part of an over-allotment option.
"The current shareholders decided not to sell any shares in
the offering - except for the over-allotment shares - because
they see the real value of the company higher than the price
achieved during the offering," said Antonin Piskacek, head of
corporate finance at bank Ceska Sporitelna, which managed the
issue. "But the capital increase was well covered."
The company did not provide data on total demand.
The share sale gives the country's fifth-largest brewery
group by revenue a market capitalisation of 1.87 billion crowns.
The free float after the offering is equal to 19.7 percent of
the company's stock, excluding the over-allotment option.
The Czech Republic, home of the original Pilsner lager, has
the highest per-capita annual beer consumption rate in the world
at 144 litres, but beer drinking is down since the global
economic crisis of 2008-09.
Lobkowicz said half the proceeds of the share sale would go
to expanding its distribution network by buying new bars and
restaurants. It also plans to spend 100 million crowns to
acquire a new brewery with annual output of between 80,000 and
100,000 hectolitres, and to boost exports.
Analyst Milan Lavicka, at banking group J&T Banka, said
current owners holding on to shares could show they have faith
in the company.
"It is too small a company to make some funds or
institutional players interested, but for retail shareholders
the outcome is quite positive," he said. "Thanks to the low
price and the small number of shares subscribed, one can expect
there could be interest even after the IPO."
Lobkowicz also said all shareholder loans to the company had
been capitalised and as a result the firm's equity increased by
1.8 billion crowns.
"The company was positively surprised by the interest and
demand of the investors from the Czech Republic, especially the
retail investors," it said in a statement.
The biggest shareholders are Martin Burda and Grzegorz Hota,
who held 55 and 30 percent, respectively, before the offering.
Trading in the stock should start in Prague on May 28.
The Czech beer market is dominated by Pilsner Urquell lager
maker Plzensky Prazdroj, a unit of SABMiller,
Staropramen - owned by Molson Coors - and local units of
Heineken. Lobkowicz owns seven Czech breweries which
have a share of between 4 and 5 percent of the domestic market.
Lobkowicz produced 854,000 hectolitres of beer in 2013 and
posted a net loss of 73.8 million crowns on flat revenue of 1.2
billion, of which a fifth came from exports, according to its
($1 = 20.1010 Czech crowns)
(Additional reporting by Robert Muller; Editing by Pravin Char)