Belgacom yesterday made a strong stock market debut, with its share price bucking an otherwise weaker market to close up almost 5 per cent.
Belgacom's long-awaited initial public offering is the largest ever in Belgium and the biggest in Europe since mobile operator Orange raised €6.3 billion in February 2001.
"I think everybody must be feeling very happy with what went on today when you see how volatile the market has again become," said a Brussels banker. "There's nothing to guarantee that the window of opportunity for European IPOs will stay open much longer and when you look at X-Fab, you must feel Belgacom was right to avoid any greediness."
Last week, X-Fab, the chipmaker, was forced to shelve what was supposed to be Germany's first IPO since the autumn of 2002 following a delay in establishing its prospectus.
Belgacom was priced at the weekend at €24.50 per share, giving it a market valuation of €8.6 billion, which was at the lower end of an indicative range that was already judged to be conservative by most dealers and analysts.
Yesterday, its share price closed up 4.7 per cent at €25.67. Belgacom's debut contrasted with that of Eircom, the Irish telecommunications operator, which stayed below its issue price of €1.55 a share when it started trading on Friday.
Yesterday Eircom's share price closed in Dublin at €1.47. It begins trading officially on the Dublin and London stock exchanges tomorrow. In London, shares dropped by eight cents to €1.46.
According to dealers the stock was being reasonably well supported at this level as investors considered the 7.1 per cent yield on offer to be appealing. Some 12 million shares changed hands in Dublin.
The Belgacom IPO was an opportunity for Belgacom's foreign investors SBC Communications of the US, Singapore Telecommunications and Denmark's TDC to sell their combined 46.9 per cent stake, which they bought for almost $2.5 billion in 1995 when the government agreed to a partial privatisation of the national phone company.
The three shareholders, however, had long pushed for an IPO in order to reinvest the proceeds in their domestic markets.
Belgacom's offering was more than three times subscribed for institutional investors and two- and-a-half times for retail investors. Some analysts have voiced concerns about Belgacom's high cost structure and the prospect of tougher competition on its home turf.
But Belgacom has a healthy balance sheet and is seen as a strong and stable dividend earner, having pledged to pay out more than 50 per cent of future profits.
