Packaging group Smurfit Kappa will return to the stock market this morning with a likely share price of €16.50 and a market capitalisation of some €3.6 billion.
The group made light of volatility in the international stock market to strike a price in the upper half of the €14-€18 range mooted during its investment roadshow. Conditional trading in a grey market for Smurfit shares starts this morning on the Dublin and London markets in advance of the flotation next Tuesday.
After the group's board finalised the transaction last evening, chief executive Gary McGann indicated in clear terms that the offering was significantly over-subscribed. "Clearly the significance of the over-subscription was such that we could have priced this anywhere, but the objective clearly was to get the best quality shareholder register we could get - and, more importantly, that there was clearly upside opportunity for people that invested in the share," he said.
Smurfit Kappa has described the transaction as the largest primary offering within the Irish market and largest capital and equity raising in the paper packaging sector.
It is understood that institutional investors in Britain will have some 50 per cent of Smurfit Kappa's new stock after the flotation, with US-based institutions taking up some 20 per cent of the offering. Irish institutions will have 10-15 per cent of the new stock and the balance goes to investors in continental Europe.
"I think you can take it that all of the top-quality names in the investment community have made investment offers and there'll be a very very high quality book right across the geography," said Mr McGann.
Retail investors have been excluded from the initial public offering (IPO) and each of Smurfit Kappa's current owners will be unable to sell down their shares until the expiry of lock-in, 180 days after the flotation.
The new shareholders will hold about 40 per cent of Smurfit Kappa's stock after flotation, which dilutes the stake of the private equity owners who have taken the group to the market.
Madison Dearborn will have 21 per cent of Smurfit Kappa after the transaction, while CVC and Cinven will have about 23.5 per cent. Management will hold some 5 per cent and "co-investors" hold the balance.
"Management are investors in the IPO at IPO price to a reasonably significant extent. Effectively, about 150 managers are investing about €7.5 million in the IPO," Mr McGann said.
He said he would be "totally dishonest" to say that international market volatility didn't cross his mind during the roadshow, but said there was no cancellation of meetings during the process. "In times of uncertainty, people a need certainty and I like to think there was a flight to quality here."
Mr McGann paid tribute to the group's outgoing chairman, Dr Michael Smurfit, who is succeeded by Seán FitzPatrick of Anglo Irish Bank.
