Poor Demand Forces SEA To Scrap IPO

November 30, 2012

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Milan airport operator SEA has scrapped its initial public offering because of insufficient demand, the company said on Friday.

"The withdrawal of the global offering comes as the number of subscriptions came in below the amount on offer," SEA, which runs Milan's Linate and Malpensa airports, said in a statement.

The company did not provide details on demand levels.

Market sources said that at midday Friday, offers had been put in for only 30 to 40 percent of the 58.5 million shares on offer.

The offer closed at 1500 GMT after the deadline for institutional investors to place orders was extended by a few hours in a last-ditch attempt to attract more interest.

SEA had set a price range of €3.2 to €4.3 per share, making the total size of its planned offering EUR€252 million (USD$322 million).

Eighty-five percent of the share sale, which aimed to float up to 23.8 percent of the group, was reserved for institutional investors, with the rest for retail buyers.

The price range valued SEA, which had been aiming for a December 6 stock market debut, at between EUR€800 million and EUR€1.075 billion.

Banca IMI, Mediobanca, Morgan Stanley and UniCredit were the global coordinators for the share offer.


The listing was undermined from the start by a bitter rift between the company's two biggest shareholders - the city of Milan and investment fund F2i.

In the statement, SEA said it had mandated its chairman to take any necessary action to safeguard the company's interests following the IPO failure.

A source, who declined to be identified, said SEA was considering a possible complaint against F2i with market regulator Consob.

The mayor of Milan, Giuliano Pisapia, said the interruption of the listing had damaged not only the company and Milan but also the whole country.

"The climate had been disturbed, full clarity is needed," Pisapia said in a statement.

The city of Milan holds 56 percent of SEA and backed the listing, which would have been only the third on the Milan stock exchange since 2011.

But the timing and terms of the share offer were criticised by F2i, which has a stake of just under 30 percent in SEA and publicly accused the company of withholding sensitive data, including negative airport traffic numbers, from its prospectus.

That prompted the market regulator to request SEA to add the relevant information to its prospectus just as the offer was being marketed - a major embarrassment.

"The city of Milan will continue to be our majority and controlling shareholder, and failure to agree with F2i on certain matters could have a material adverse effect on SEA as well as its ability to conduct its businesses and pursue its strategies," the updated prospectus said.

F2i bought its stake in SEA last year for just over €5 a share, and would have had to book a write-down on its accounts if the share sale had gone ahead at a lower price.

Europe has seen a pickup in IPOs since the start of September, but those working on deals say investors remain choosy about which to back.

The withdrawal of SEA's IPO is a big setback for the cash-strapped province of Milan, which wanted to sell its 14.6 percent stake in the company.

In a separate statement on Friday, the province said it planned to auction the stake.