April 8, 2014 / 2:40 PM / 5 years ago

UPDATE 2-Chief of Spain's eDreams plays down first-day share drop

(Recasts with chief executive comments)

By Sarah Morris

MADRID, April 8 (Reuters) - The chief executive of Spanish online travel agency eDreams Odigeo played down an opening-day drop in his company’s shares on Tuesday, saying his focus remained on long-term developments regardless of short-term share moves.

The stock fell as much as 7 percent in what some saw as part of a broader investor reaction against internet-related share offerings.

“I’m sure that in the same way that they (the shares) fell, they will rise again,” Chief Executive and founder Javier Perez-Tenessa said in an interview after the ringing of the opening bell at the Madrid stock exchange.

“We’ve been focused for 14 years on creating long-term value.”

Despite the negative market debut, the flotation, the first by a company in Spain in three years, marked another stage in the country’s recovery from a deep recession and showed improving demand for Spanish assets among investors.

Perez-Tenessa said international investors from Britain, France, the United States and Germany had put 433 million euros into shares in the company, valuing it at 1.5 billion euros including debt of 390 million.

EDreams Odigeo, which offers online deals on flights, hotels and travel insurance, is the first Spanish company to go public since 2011, disregarding two real estate investment vehicles which listed earlier this year.


The flotation comes after high-profile U.S. technology listings such as Facebook and Twitter, but also follows last month’s opening-day fall of Candy Crush maker King Digital Entertainment, seen by many analysts as casting a shadow over other web-linked IPOs.

Perez-Tenessa said it was important to distinguish between technology companies without revenues and those with growing income. His company grew core earnings or EBITDA by 62 percent in 2013, though it made a net loss of 23.3 million euros and said in its prospectus it won’t pay a dividend for the near future.

Its shares closed down 4.3 percent from their sale price at 9.81 euros, after falling as low as 9.47 euros. By comparison Spain’s index of 35 most-liquid companies was down 1.2 percent.

“The stock was not especially cheap for a company that is practically a technology firm. The market may be a little dubious because of that,” said Alejandro Varela, a fund manager at Spain’s Renta 4. But he said the drop was surprising given the healthy demand for the placement.

The company, which offers deals in 42 countries through websites such as Go Voyages and Opodo, priced its IPO at 10.25 euros per share. The price range had been narrowed to between 10 and 10.25 euros from an original range of 9.25 to 11.50 euros.

For Spain the flotation still counts as a success, given many investors were drawn into the 2011 IPO of bailed-out lender Bankia, only to lose out in its state rescue less than a year later.

In its offering, eDreams Odigeo sold 4.8 million new shares and 31.8 million shares belonging to existing shareholders including senior management and private equity firms Permira and Ardian. It plans to use part of the funds to pay down debt and lower interest costs. (Additional reporting by Sonya Dowsett and Sarah White; Editing by David Holmes)

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