March 17, 2011 / 5:54 PM / 7 years ago

UPDATE 3-Denmark's ISS pulls IPO, casts doubt on Glencore

* ISS is biggest European casualty of market volatility

* Offer oversubscribed, ISS cites worries over aftermarket

* ISS may spur Glencore to rethink IPO plans

* IPOs, globally, being held up or canceled (Adds details on IPO delays and cancellations globally)

By Kylie MacLellan and Quentin Webb

LONDON, March 17 (Reuters) - Denmark’s ISS [ISSHOI.UL] ,which provides cleaning and cooking services, pulled its planned $2.8 billion initial public offering on Thursday, the latest in a string of IPOs to be scotched as markets whipsaw.

ISS is Europe’s biggest IPO casualty so far and casts doubt on the chances of commodities giant Glencore International Ltd’s [GLEN.UL] float, which some had expected by mid-May.

The delay raises questions about the strength of markets globally after a series of large IPOs and several leveraged buyouts made many bankers hopeful the financial system was recovering from the credit crunch.

Stock markets worldwide have dropped this week as fears of a Japanese nuclear crisis added to existing concerns about political unrest in the Middle East and rising oil prices.

IPO issuers are pulling back in response. Private equity firm Apollo Global Management LLC delayed on Tuesday its planned $500 million U.S. IPO until the markets settle down.

Chinese oil equipment manufacturer Hilong Holdings postponed a planned HK$1.48 billion IPO. ($189.7 million) [nN15243122][nL3E7EH0L7] <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For a graphic of IPOs cancelled or withdrawn globally, please see: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Outsourcing group ISS, which closed the books on its Copenhagen float earlier on Thursday, said concerns about volatile markets prompted it to postpone, despite the offering being oversubscribed within its price range.

“It is a surprise. I don’t think many people expected this,” said Martin Hansen, an analyst at Jyske Bank. “The big question now is whether this is a postponement for weeks, months or years. Or whether it is a cancellation.”

The company implied it was concerned about how its shares would perform the day they started trading, given how much markets have moved.

“(T)he underlying level of volatility and uncertainty continues and given the existing shareholders’ and the company’s desire to achieve a successful IPO with an orderly aftermarket, it has been decided to postpone the IPO,” ISS said in a statement.

Violence in Libya and Bahrain, and Japan’s nuclear crisis have kicked the VDAX-NEW volatility index .V1XI -- one of Europe’s main investor fear gauges -- to its highest level in nine months earlier this week, while European shares slid to three-month lows. [ID:nLDE72E0NA] [ID:nLDE72E2BJ]


ISS’s success would be an important confidence maker and other planned IPOs -- such as from Glencore, one of this year’s biggest and most closely watched deals -- may now also be reconsidered. [ID:nLDE72E26A] [ID:nLDE72G1VT]

French media group Lagardere (LAGA.PA) pulled a planned listing of its 20 percent stake in pay-TV channel Canal+ on Wednesday, blaming market turmoil following the Japanese earthquake. [ID:nLDE72F2JT]

Germany’s Hapag Lloyd AG [HPLG.UL], which was expected this week to announce an intention to float, has postponed the decision until next week as it assesses the impact of events in Japan on global markets, according to two sources close to the Hamburg-based company.

    Hapag Lloyd had wanted the IPO in April.

    Although U.S. private equity firm Apollo is delaying its IPO, analysts have yet to call a broader U.S. impact.

    “There is more uncertainty in the (U.S.) markets than a week ago, that’s a fair statement, but I don’t see any trends forming quite yet,” said Morningstar IPO strategist Bill Buhr.

    ISS had narrowed its price range to between 100 and 110 Danish crowns on Wednesday, the bottom end of its original 100 to 135 Danish crown price guidance. [ID:nLDE72F2HT]

    ISS, which started as a small security firm with 20 night watchmen, had hoped to raise 13.3 billion Danish crowns ($2.5 billion) from the sale of new shares to pay down a heavy debt legacy from when Goldman Sachs Group Inc’s (GS.N) private equity arm and Sweden’s EQT bought it in 2005.

    ISS is one of the world’s largest private sector employers, with over 500,000 staff.

    Funds raised from the IPO, along with a new bank loan, were due to be used to refinance all of ISS’s outstanding loans, some of which the company needs to repay next year as they come to an end of their maturity.

    ISS’s private equity owners, who had planned to keep the majority of their holding in the IPO, broke off talks in January on an $8.5 billion takeover by private equity firm Apax after they disagreed on price.

    The duo were to provide some existing shares for a management share scheme and an overallotment option, bringing the total size of the IPO to around 15 billion Danish crowns -- a sale of up to 63.7 percent of the company.

    ISS shares, which would have been Europe’s largest listing so far this year, were due to begin trading on Friday.

    Goldman Sachs and Morgan Stanley were joint global coordinators on the ISS share sale. Citigroup, Deutsche Bank, HSBC and Nordea were also joint bookrunners. (Additional reporting by Mette Fraende in Copenhagen, Isabell Witt in London and Arno Schuetze, Alexander Hueber in Frankfurt and Clare Baldwin and Alina Selyukh in New York; editing by Will Waterman, Dan Wilchins and Andre Grenon)

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