Helios Towers provides relief to jittery IPO market with steady London debut

LONDON (Reuters) - Shares in African mobile networks operator Helios Towers HTWS.L were up slightly on their market debut in London on Tuesday, providing some relief to a jittery market for initial public offerings.

The company, which operates phone masts in parts of sub-Saharan Africa, had earlier on Tuesday priced its IPO at 115 pence per share, at the low end of its pricing range, as reported by Reuters on Monday.

The shares rose more than 4% at one stage in early trade to 120 pence per share before settling just above the IPO price at around 116 pence by 0830 GMT.

Market participants were watching the Helios IPO closely after Kazakh fintech KSPI.KZ postponed its float in London last week, reviving concerns about stock market listings in Europe. The London market has faced additional volatility from uncertainty about Britain's departure from the European Union.

Helios Towers set its IPO size at 250 million pounds ($317 million) and gave the company a market capitalization of 1.15 billion pounds ($1.45 billion). The size was short of the maximum target of $500 million.

“There was some availability to price it a bit higher but in the interest of best allocation, management wanted to size and price the transaction to create a long-term high quality shareholder base and to see it trade well,” said a source familiar with the transaction.

“We know it’s difficult IPO conditions out there,” he added.

He said that over 85% of the transaction was placed with long-only investors, with the five biggest investors taking over half the transaction; usually taken as a sign of a stable investor base with a core group of committed shareholders.

Memories of Airtel Africa AAF.L also lingered in investor minds; that company's shares dropped as much as 12.5% on its London stock market debut in June and has dropped even further since.

It has been a challenging year for the European IPO market, with investor sentiment battered by expectations of a downturn in major economies across the continent, particularly that of Germany.

In the UK, concerns about the potentially disruptive effect of a no-deal Brexit has added to the worries, and there were concerns that London listings could suffer as a result, especially with the Oct. 31 deadline looming.

Helios operates phone masts in the Democratic Republic of Congo (DRC), Republic of Congo, Ghana, South Africa and Tanzania.

It had shelved previous plans for its IPO amid concerns about political risks in DRC and Tanzania.

Helios has said it will use the proceeds for expanding its services, including possibly into new countries.

The IPO values the company at 8.5 times earnings before interest, tax, depreciation and amortization (Ebitda), said the source, adding it was a “robust” multiple compared to peers operating in Sub-Saharan Africa.

Kash Pandya, Chief Executive of Helios, said the float “signifies our commitment to spreading mobile infrastructure across Sub-Saharan Africa”.

Bank of America Merrill Lynch, Jefferies and Standard Bank were joint global coordinators while EFG Hermes and Renaissance Capital were bookrunners.

Reporting by Iain Withers and Abhinav Ramnarayan; Editing by Rachel Armstrong and Susan Fenton