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Ziggo makes zippy debut

by Renee Cordes | Published March 21, 2012 at 9:19 AM

Shares of private equity-backed cable operator Ziggo NV soared in their debut on the NYSE Euronext Amsterdam exchange Wednesday, March 21, after Europe's largest initial public offering in eight months.

Warburg Pincus and Cinven Ltd. raised about €804 million ($1.1 billion) from the sale of 43.5 million shares at €18.50 each, at the top of an indicative range, in an expanded IPO that was "multiple times oversubscribed," according to the Dutch company.

The IPO, which will raise no new proceeds for the company, is the first in Amsterdam in more than two years and Europe's biggest since Spain's Bankia SA raised $4.4 billion last summer. It also comes two days after Swiss business services provider DKSH Holding Ltd. raised Sfr821 million ($900 million) through an IPO in Zurich which also priced at the top of the range.

"With stock markets beginning to pick up since the beginning of this year and some stability returning, everyone is looking to this deal as the one that might re-open the European IPO markets," said Sarah Murphy, a London-based partner with Freshfields Bruckhaus Deringer LLP. "Companies and private equity owners might now be tempted to test the capital markets once more."

Murphy advised Ziggo on the IPO along with Amsterdam-based Freshfields partners Robert ten Have and Dirk-Jan Smit.

Shares in Ziggo were up more than 17% to trade at €21.66 by late morning Wednesday, for a total market value of about €4.33 billion.

Higher than expected demand prompted Ziggo's owners to sell 43.5 million shares rather than the 35 million originally planned, representing 21.7% of the total number of issued ordinary shares. The owners added a 15% overallotment option. If the over-allotment option is exercised in full, the IPO will represent 25% of the total issued share capital of Ziggo, the company said Tuesday.

The stock was expected to be priced between €16.50 and €18.50.

"We are very happy to complete our IPO with such strong interest from investors, attracted by our combination of growth, dividends and deleveraging, Ziggo CEO Bernard Dijkhuizen said in a statement late Tuesday.

Joseph Schull, head of Warburg Pincus in Europe, said in a separate statement that Ziggo is a "good illustration" of the buyout shop's investment approach, in that the firms had folded three regional Dutch cable companies together to create Ziggo.

J.P. Morgan Chase & Co. and Morgan Stanley are the joint global coordinators for the Ziggo IPO.

Deutsche Bank AG, J.P. Morgan, Morgan Stanley and UBS are acting as joint bookrunners. ABN Amro Bank NV and Rabobank Group are the joint retail bookrunners, while Société Générale SA is serving as the co-lead manager.

Utrecht, Netherlands-based Ziggo posted Ebitda of €835 million in 2011, up 7.7% from the previous year, and sales of €1.48 billion The €835 million represents a profit marging of 56.5% of sales, exceeding Kabel Deutschland GmbH's 43.6% margin and 52.5% at Telenet Group Holding NV, which is controlled by John Malone's Liberty Global Inc. Had Ziggo's owners not gone for an IPO, Liberty Global might have pursued a deal with the company.

Ziggo was established in 2007 from the merger between @Home, Casema NV and Multikabel NV, three of the four largest cable operators in the Netherlands. It began doing business as Ziggo in 2008.

Cinven's website puts the investment for the creation of Ziggo at €5.45 billion.

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