RPT-Czech Pegas IPO raises up to 136 mln euros

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By Jan Lopatka

The sale of new and existing stock by Czech artificial fabrics maker Pegas Nonwovens raised as much as 136 million euros ($178.3 million), the company said on Friday.

Pegas, which by market share is Europe's number two fabrics supplier to makers of hygiene products such as nappies, priced the offering at 27 euros per share, the top of the 21.5-27 euro indicated range.

Pegas said it sold 1.81 million new shares in the offering, below the maximum 2.02 million set in the issue prospectus.

A further 2.58 million shares were sold by the firm's majority owner, private equity fund Pamplona Capital Partners I, plus 0.66 million shares in an over-allotment option.

The 136 million euro total includes the over-allotment option. The new shares will raise a gross 48.9 million euros, which the company aims to use mainly to pay down debt.

The stock will make its debut on the Prague Stock Exchange on Dec. 18, and start trading in Warsaw on Dec. 21.

It will become only the third IPO ever on the Prague exchange, and an encouraging sign for a bourse long neglected by investors and firms deterred by a lack of transparency on Czech capital markets in the 1990s. The other stocks on the bourse were listed en masse in the early 1990s in coupon privatisations.

Pegas's issue price corresponds to 749.2 Czech crowns and 102.33 Polish zlotys, the company said.

Brokerage Atlantik FT analyst Petr Novak said he valued the company at 31.7 euros per share, using as benchmark the average 9.5 enterprise value/EBITDA ratio of listed rivals such as Finland's Ahlstrom .

Analyst Jiri Stanik of Wood & Company said he liked the firm's management but it seemed expensive at the IPO price, given likely competition pressure on margins, few big customers who can limit pricing power, and exposure to the price of crude oil products that are its key resource.

"We think competition will only grow. This firms margins are huge, and the key question is how sustainable these margins are," he said.

The company's total market capitalisation is 249.2 million euros at the 27 euro per share issue price.

Pegas said free float would reach 54.6 percent, and Pamplona's stake would drop to 43.4 percent if the over-allotment option were exercised in full.

One market source said the offering was six times oversubscribed and a second said it was four times oversubscribed at the 27 euros per share price.

Pegas gave no information on the reason for the smaller number of the new shares, nor on the number of bids.

It said 90 percent of the offering was placed with institutional investors and the rest went to retail investors.

Pegas price quotes will be available to Reuters clients under the Reuters Instrument Codes , and . (Additional reporting by Jan Korselt) ((Editing by Will Waterman; prague.newsroom@reuters.com; Reuters Messaging: jan.lopatka.reuters.com@reuters.net; +420-224 190 474)) ($1=.7627 Euro)

Keywords: PEGAS IPO/

[PRAGUE/Reuters/Finance.cz]