Multimedia Cable TV Plans Biggest Warsaw IPO Since December

Multimedia Polska SA owners seek to sell a 49 percent stake in Poland’s third-biggest cable TV operator by the end of June in what is set to be central Europe’s largest initial public offering since December.

Multimedia will return to public trading after its owners delisted it from the Warsaw Stock Exchange in 2011, taking advantage of low valuations and starting a search for an industry investor. In 2012 Multimedia hired JPMorgan Chase & Co. to help it find a buyer and dropped the plan the same year. Sales have increased 12 percent since 2011 as the company boosted its customer base, while net income dropped 31 percent.

The value of initial and secondary share offerings of European companies has jumped 51 percent to a seven-year high of $61 billion this year from a year earlier. BI European Cable and Satellite index, which shows market capitalization of pay TV providers in Europe, trades at an all-time high after it gained 44 percent since the start of 2013.

“The company seems to be taking advantage of the good moment in the European industry as we recently saw a few sale deals,” Dariusz Kusmider, who helps manage the equivalent of $1.2 billion at mutual fund KBC TFI SA in Warsaw, said by phone today. “The IPO may attract interest from foreign investors, however the fact that the company failed to find an industry investor may be a negative factor.”

Industry Consolidation

Europe’s communications market is consolidating as Vodafone Group Plc last week agreed to buy Spanish cable operator Grupo Corporativo Ono SA. Billionaire John Malone’s Liberty Global Plc (LBTYA) agreed to take full control of Dutch broadband provider Ziggo NV for $6.7 billion in January, while French cable carrier Numericable SA won a bid to combine with Vivendi SA (VIV)’s SFR wireless unit earlier this month.

Multimedia’s IPO is set to be the biggest in the region since Poland sold a 2.17 billion-zloty stake in power utility Energa SA in December, according to data compiled by Bloomberg.

The 49 percent stake may be valued at as much as 1.11 billion zloty, based on Multimedia’s average earnings before interest, taxes, depreciation and amortization, or Ebitda, of 345 million zloty in the last three years and net debt of 1.16 billion zloty, according to Bloomberg calculations. Its peers trade on average of 9.9 times enterprise value, or a sum of equity and net debt, to Ebitda, data compiled by Bloomberg show.

M2 Investments Ltd., controlled by Tomasz Ulatowski and Ygal Ozechov, as well as Tri Media Holdings Ltd, Dunaville Trading Ltd. and Collegium Anetta Kolasinska i Wspolnicy plan to sell part of their stakes in the IPO, the Gdynia, Poland-based company said in a regulatory filing today.

Dividend Yield

“The success of the IPO will depend on what the company will offer investors in terms of growth potential,” Dawid Czopek, who helps manage the equivalent of $660 million at MWealth Management SA in Warsaw, said by phone today. “That seems to be tough as the company operates in a defensive industry but a high dividend yield may be an incentive.”

Multimedia competes for TV subscribers with local units of Liberty and Vivendi, and for Internet users with companies such as Orange SA. (ORA) Warburg Pincus LLC became a strategic minority investor last year in Inea SA, the fourth-largest Polish cable operator.

“Europe’s private cable operators are increasingly looking into public listings as their competitive advantage in broadband services gives them higher valuations than their telecommunications peers,” Erhan Gurses, an analyst at Bloomberg Industries said by e-mail today.“A rising IPO tide provides a good opportunity to seek funding.”

Last year Multimedia sold 1.04 billion zloty of seven-year notes to refinance its debt.

UBS AG will act as the IPO’s global coordinator and bookrunner. UniCredit SpA will be a joint bookrunner and offering agent while Raiffeisen Centrobank AG will act as a joint lead manager, according to Multimedia’s statement.

To contact the reporters on this story: Piotr Bujnicki in Warsaw at pbujnicki@bloomberg.net; Maciej Martewicz in Warsaw at mmartewicz@bloomberg.net

To contact the editors responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net Pawel Kozlowski

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