Tags: ziggo | cable | ipo | netherlands

Dutch Cable Firm Ziggo Raises $1.1 Billion in IPO

Tuesday, 20 March 2012 08:32 PM

Ziggo NV, the Dutch cable company owned by Warburg Pincus LLC and Cinven Ltd., raised about 804 million euros ($1.1 billion) selling shares at the top end of its forecast in the biggest initial public offering in Europe so far this year.

Shareholders of Ziggo sold 43.5 million shares at 18.50 euros each, the Utrecht, Netherlands-based company said in a statement Tuesday. The IPO was “multiple times oversubscribed” at the offer price and values the company at 3.7 billion euros, Ziggo said.

“We are very happy to complete our IPO with such strong interest from investors, attracted by our combination of growth, dividends and deleveraging,” Chief Executive Officer Bernard Dijkhuizen said in the statement.

Warburg and Cinven are looking to take advantage of Ziggo’s above-average profitability, and the cable company plans to pay 220 million euros in dividends this year to entice new investors. The company said on March 9 the new stock would be priced at 16.50 euros to 18.50 euros a share.

Ziggo is the largest cable-television operator in the Netherlands with an estimated network coverage of 56 percent of the country’s easily connectable homes at the end of last year, according to its prospectus. It offers TV, digital pay TV, high-speed broadband Internet and telephone services. Its main strategy is to offer packages of services at a lower price than customers would pay for the individual service subscriptions.

Regional Operators

The company was created by combining three cable operators that Warburg and Cinven acquired between 2005 and 2007, according to the website of Warburg, which drove the consolidation. Ziggo competes with Royal KPN NV and Liberty Global’s UPC in the Dutch market.

“We identified the Dutch cable market as an attractive and growing industry and then created a new national market leader,” Joseph Schull, head of Warburg Pincus in Europe, said yesterday in an e-mailed statement. “We also supported significant capital investment and an ambitious growth strategy,” he said.

Ziggo increased the amount of stock in the offering to 43 million shares from 35 million shares originally planned, and added a 15 percent over-allotment option. If the over-allotment option is exercised in full, the IPO will represent 25 percent of the total issued share capital of Ziggo, the company said.

“This has been a classic ‘consolidate and build’ investment, with Ziggo expanding revenues and margins whilst delivering significant innovation to customers,” David Barker, a partner at Cinven, said in an e-mailed statement.

European IPOs

The share sale is the first IPO on the Amsterdam Stock Exchange in more than two years. Trading in the shares will start Wednesday.

Ziggo is among European companies seeking to sell shares as the region’s stock markets rebound. While the Stoxx Europe 600 Index retreated yesterday, the gauge has still gained 10 percent this year as the European Central Bank disbursed 1 trillion euros to the region’s lenders.

On March 19, DKSH Holding Ltd., a Swiss company that helps clients expand in Asian markets, raised 821 million francs ($900 million) through an IPO in Zurich.

Ziggo’s earnings before interest, taxes, depreciation and amortization rose to 835 million euros last year, or 56.5 percent of sales. That ratio, a gauge of profitability known as Ebitda margin, is 43.6 percent at Kabel Deutschland and 52.5 percent at Telenet, controlled by Liberty Global Inc., according to data compiled by Bloomberg.

Ziggo won’t get any proceeds from the offering, according to the original IPO prospectus. Warburg and Cinven, seeking to return cash to investors, planned to reduce their stakes in Ziggo to about 29 percent each from 36 percent if the over-allotment option is fully exercised, the prospectus shows. Some executives and employees also planned to sell shares in the offering.

JPMorgan Chase & Co. and Morgan Stanley were managing the IPO, alongside Deutsche Bank AG and UBS AG.

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Tuesday, 20 March 2012 08:32 PM
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