(Corrects spelling of "paragraph" in explanatory line)
* CTT stock up as much as 7 pct vs 5.52 euros sale price
* Company valued at 830 million euros
* Sale takes Portugal privatisation proceeds to 6.9 bln eur
* Tops year-end target of 5.5 billion
(Rewrites first paragraph, adds sector comparison, details,
By Daniel Alvarenga and Sergio Goncalves
LISBON, Dec 5 Shares in Portuguese postal
service CTT rose as much as 7 percent on their stock
market debut on Thursday, marking a successful selloff that
helps Lisbon further exceed a privatisation target imposed as
part of its international bailout.
The CTT placement - the first flotation on Lisbon's stock
exchange since renewable energy company EDPR in 2008 -
takes Portugal's proceeds from the sale of state assets to 6.9
billion euros ($9.4 billion), beating its end-2013 target of 5.5
The sale also sets a positive precedent as Lisbon plans
further disposals, which could include the insurance arm of
state-owned bank Caixa Geral de Depositos, flag air carrier TAP,
the cargo unit of the national railway company Comboios de
Portugal and parts of water utility Aguas de Portugal.
Portugal hopes to exit its bailout programme by mid 2014 and
the ambitions sale of state assets is part of that project,
which has made faster progress than that of Greece for instance
where the first major privatisation was only completed in
Portugal has already sold stakes in power firms EDP
and REN as well as in airport operator ANA and it
promised to privatise CTT in its 2011 rescue programme agreed
with the European Union and International Monetary Fund.
The oversubscribed sale of a 70 percent stake in CTT, which
traces its origins to Portugal's days as a global power in the
16th century, was priced at 5.52 euros per share, the top of a
previously indicated range and valuing the company at 830
million euros ($1.1 billion).
Portugal will reap 580 million euros from the sale.
CTT stock was up 4 percent at 5.7 euros by 1220 GMT on heavy
turnover of 168 million euros, a similar rise to that seen in
Belgium's bpost flotation in June, but lagging the
near 40 percent premium set in the October flotation of
Britain's Royal Mail.
The latter deal has left the UK government facing
accusations it was underpriced.
STOCK WITH POTENTIAL
Analysts noted CTT's strength came despite declining postage
volumes and CTT's dependence on the Portuguese market.
"The attractive part (of CTT) is the dividend and the
possibility of setting up a postal bank ... I think the stock
has potential," said Gualter Pacheco, a broker at Go Bulling in
Porto, referring to a recent approval to expand in financial
Joao Cabecana, analyst at Banco Big in Lisbon, also noted
CTT was more appealing than its peers in terms of its dividend
yield, at 7 percent on the basis of its market price against a
3.5 percent average for the European postal sector as a whole.
However, it is valued at a slight premium in terms of its
forecast price-to-earnings ratio of 10.44 times and 15.8 times
enterprise value-to-EBITDA ratio, against peers' average of 7.95
times and 14.7 times respectively.
CTT has one of the largest retail networks in Portugal, with
2,500 branches and 4,000 corner shop partnerships where bills
can be paid as well as stamps purchased.
Financial services currently make up 8 percent, or 58
million euros, of CTT's sales and last month the Bank of
Portugal authorised it to set up a postal bank if future
shareholders opt to do so.
Portugal's economy minister had said on Wednesday the
privatisation beat expectations by attracting foreign investors,
who bought around 43 percent of the capital in the offering.
The names of institutional investors who bought relevant
stakes in CTT will be revealed later.
Domestic investors snapped up more than 26 percent of the
capital, while state property holding Parpublica retains 30
($1 = 0.7377 euros)
(Editing by Tom Pfeiffer and David Holmes)