To: jhild who wrote (7169 ) 10/21/1997 1:15:00 PM From: Glenn D. Rudolph Respond to
FOCUS-Privatisation wave breaks over Europe
Reuters Story - October 20, 1997 13:52
%FR %TEL %IT %DE %AIR %PT %INS FTE.PA TIT.MI ENE PTCO.IN LHAG.F DTEG.F GANP.PA AIRF.PA V%REUTER P%RTR
By Trevor Datson
LONDON, Oct 20 (Reuters) - A fresh wave of privatisation
fever swept France, Italy and Spain on Monday as one blue-chip
company made a dramatic bourse debut and two others waited
nervously in the wings.
Whatever the perils of privatisation, there is no sign the
steady stream of companies going public will be stemmed in the
near future.
France Telecom shot straight to the top of the
Paris Bourse's market capitalisation league, as an opening share
price of 215 francs valued the telecoms group at 215 billion
francs ($36.2 billion).
That ranks the group 11th among global telecoms players in
terms of market capitalisation. It is seen as fourth largest in
sales terms.
Although the opening price represented an instant 18 percent
return on the 182 francs per share at which 3.9 million retail
investors subscribed to the issue, there will be few champagne
corks popping in Paris tonight.
Massive oversubscription limited private subscribers to
between 20 and 56 shares. The institutional tranche of the sale,
priced at 187 francs, was oversubscribed 20 times.
Even so, France Telecom's socialist millionaire chairman
Michel Bon was well pleased with the first day of France's
largest stock market flotation, which saw the state divest 23
percent of its holding.
"It's far better than we expected," Bon said before leaving
for New York by Concorde for the Wall Street debut.
Monday's dealings were studied closely in Italy, whose own
telecoms blue-chip Telecom Italia posted cautious gains
of about one percent on the first day of its week-long public
offer.
Although massive in itself, the 49.45 billion francs ($8.33
bln) raised in the France Telecom spin-off will be dwarfed by
the Italian Treasury's sale of 44.7 percent of Telecom Italia,
which is expected to reap 26 trillion lire ($15.1 billion).
The public share offering runs from October 20 to 24. The
final price will be set on October 25 in a sell-off dubbed the
biggest operation of its kind ever carried out in Europe.
But with a maximum price set at 11,200 lire a share and the
minimum stake set at 1,000, private investors will be asked to
fork out up to 11.2 million lire ($6,490), well out of the reach
of many individuals.
If prospective Telecom Italia investors were nervous, their
Spanish colleagues bidding for a stake in utility Endesa were
positively shaken.
Although all segments of the sale of 25 percent of Endesa
were fully or oversubscribed, the key attraction of the sale --
an alliance with Chile's top power firm Enersis -- has
been thrown into doubt.
The share price tumbled on Monday after news last week that
Enersis planned to rejig the August deal which would have given
Endesa a controlling stake.
Retail investors were offered the chance to withdraw their
bids on Monday even though the official period to revoke orders
ended last Thursday.
The price for the offering, due to be made public after the
close of Wall Street on Monday, was expected to be just 2,600 or
2,700 pesetas a share -- a bargain compared with original
estimates of some 3,100 pesetas a share.
That would bring government receipts from the sale to some
700 billion pesetas ($4.69 billion), down from the 800 billion
originally expected.
By the end of trading in Madrid, Endesa shares had fallen 75
pesetas, or 2.72 percent, to 2,685, although the overall market
was down just 0.22 percent.
Privatisation has arguably been Europe's largest single
stock market driver of the 1990s, and there is no sign that
private and institutional investors have had enough of the often
highly lucrative investment opportunities.
The three partial privatisations currently in the news
follow moves such as the 30 percent sell-off of Portuguese
electricity utility EDP in June and the $2 billion divestment of
26 percent of Portugal Telecom completed earlier this
month.
A 47 billion mark ($26.5 billion) flotation of German air
carrier Lufthansa is expected to be followed up in Bonn
this year and next by an additional 25 billion mark sale of
shares in telecoms group Deutsche Telekom .
Railway operator Deutsche Bahn, financial group Deutsche
Postbank and post franchise Deutsche Bundespost are also high on
the list.
France has said it will privatise insurer GAN by
June next year at the latest, and is also expected to sell 49
percent of the national carrier Air France .
($ = 5.935 French Francs)
($ = 1726 Italian Lire)
($ = 149.3 Spanish Pesetas)
($ = 1.770 German Marks)
