* Raised 759 mln euros in Europe’s biggest IPO this year
* Shares priced at 22 euros each, or 6.85 times EV/EBITDA
* Initial range was 21.50-25.50 euros
* IPO was over 2 times covered -sources
By Daisy Ku
LONDON/FRANKFURT, March 19 (Reuters) - Owners of top German cable television firm Kabel Deutschland [KABLD.UL] have raised 759 million euros ($1.03 billion) after pricing Europe’s biggest IPO this year near the bottom of an indicated range.
The KDG offering, Germany’s largest in two years, was priced at 22 euros per share, compared with the initial range of 21.50 euros to 25.50 euros.
U.S. private equity firm Providence Equity Partners, Ontario Teachers’ Pension Plan and the management sold a combined 34.5 million secondary shares, including a 4.5 million-share overallotment option.
“We are in the earliest stage of the IPO market; there is no huge amount of cash out there. Good stories get done, not so good stories don’t get done,” said an equity capital markets (ECM) banker.
Last month, European private equity-backed IPOs worth some $4 billion were shelved due to poor investor appetite.
The KDG deal was priced at a forward enterprise value to earnings before interest, tax, depreciation and amortisation (EV/EBITDA) multiple of 6.85 times, in line with Belgian cable operator Telenet (TNET.BR).
Although the deal was more than two times covered, people close to the deal said big German institutional investors’ demand was less than 5 percent of the offering, with most shares taken by U.S. and UK investors. “The sentiment is rather reserved. We see a problem in the company’s high debt level. This will get really expensive and eat into the cashflow once interest rates rise, which they will do sooner or later,” said one Frankfurt-based fund manager.
KDG’s market debut on Monday, under ticker symbol “KD8”, will be closely watched by chemical distributor Brenntag, which is raising as much as 837 million euros in an IPO that values it at a 20 percent to 30 percent discount to Bunzl (BNZL.L).
So far, only three of this year’s 10 IPOs in Europe are trading above their offer price — potentially dissuading investors from participating in new deals.
African Barrick Gold ABGL.L, which raised $883 million in a London listing, closed its first trading day flat earlier on Friday. [ID:nLDE62G29P]
Morgan Stanley (MS.N), Deutsche Bank (DBKGn.DE), UBS UBSN.VX and J.P.Morgan (JPM.N) were the bookrunners of KDG, while ABG’s listing was handled by Morgan Stanley and J.P. Morgan Cazenove. (Additional reporting by Eva Kuehnen, editing by Will Waterman) ($1=.7346 Euro)