There are signs of life in the market for continental flotations after the Dutch cable company Ziggo, the largest initial public offering in Europe this year, surged on its debut.
The strong start, with Ziggo shares gaining 15 per cent after it started trading, follows a healthy debut for the Swiss trading house DKSH, which also floated this week and leapt by 8.5 per cent.
Both IPOs have been keenly monitored to gauge the appetite of investors for new issues in advance of the impending Facebook flotation that is likely to be the gala market event of the year. The strong launch for both companies suggests that shareholders have become more open to risk in recent months as the macroeconomic picture has stabilised.
Ziggo’s private equity owners, Cinven and Warburg Pincus, raised €804 million (£670 million) via the sale of 43.5 million shares on the Amsterdam stock exchange, valuing the cable company at €3.7 billion.
The company is the largest cable provider in the Netherlands and, like its British counterpart, Virgin Media, was built via the merger of various networks in the country. It supplies broadband, pay-television and fixed-line telecoms services to its customer base, and the company competes with the former monopoly KPN in that market.
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The appeal of the stock has been amplified by a pledge to pay €220 million to investors in the form of a dividend this year.
Demand for the shares in the run-up to the IPO was strong enough for the owners to increase the placing to 25 per cent of Ziggo’s shares while selling the shares at the top of the indicative price range. Shares leapt from the €18.50 price to €21.20 in morning trading.
George O’Connor, a Panmure Gordon technology analyst, said that the Ziggo and DKSH deals would warm up the market for potential IPOs.
“It is generally still fragile as the macroeconomic news yo-yos,” he said. “Of course, the landmark event on the IPO calendar is the Facebook IPO and, following that, we suspect that more companies will look to take advantage of an IPO.”