Portugal Plans to Raise 430 Million Euros in IPO of CTT

Portugal’s government plans to raise at least 430 million euros ($581 million) from the sale of 70 percent of postal operator CTT-Correios de Portugal in the country’s first initial public offering in five years.

State holding company Parpublica will dispose of as many as 105 million shares of Lisbon-based CTT, with 21 million sold through an IPO and the remainder offered directly to institutional investors for at least the same price as the stock offered to individual investors, the government said in a statement yesterday.

CTT shares will be sold at 4.10 euros to 5.52 euros apiece, valuing the 493-year-old mail service at as much as 828 million euros, including a 30 percent stake that Parpublica will retain. Employees will be able to purchase as many as 5.25 million shares through the IPO, the government said.

The IPO is the first since EDP-Energias de Portugal SA disposed of a stake in its renewable-energy unit in June 2008. The transaction is taking place after the U.K. and Belgium took steps to sell their state-owned mail services this year.

Portugal was “inspired” by similar IPOs in Europe, Sergio Monteiro, secretary of state for public works, transport and communications, told reporters in Lisbon yesterday. The government is “very confident in the success of this operation which will send a message of vitality about the country’s capital markets.”

Bailout Package

Portugal’s 78 billion-euro bailout package from the European Union and the International Monetary Fund requires the government to dispose of assets and raise revenue. Authorities completed the sale of airport operator ANA-Aeroportos de Portugal SA for 3 billion euros to Vinci SA, Europe’s biggest builder on Sept. 17, almost nine months after it was announced.

CTT Chief Executive Officer Francisco Lacerda said on Nov. 14 that the he expects the IPO will be concluded by early December. The IPO prospectus says shares of CTT, whose logo still appears on mailboxes and buildings in some of Portugal’s former colonies in Africa, may start trading on Dec. 5. The sale price will be set on Dec. 3.

Royal Mail Plc’s IPO last month, the biggest privatization in the U.K. since the state-owned British Rail was broken up in the 1990s, raised 1.7 billion pounds ($2.74 billion) for the state in a stock sale that was seven times oversubscribed by small investors. A panel of British lawmakers is starting an investigation into whether the shares were under-priced.

Bank License

CTT, which is expanding its express-package delivery service to new markets as Web-based purchasing rises, requested a license from the Bank of Portugal on Aug. 5 to enable a future buyer to also operate the company as a bank, according to its website.

Nine-month net income rose 28 percent to 45.2 million euros and the company plans to pay dividends representing at least 90 percent of distributable profit in 2014 and in the following years, according to the prospectus.

Caixa Banco de Investimento SA and JPMorgan Chase & Co. are global coordinators and bookrunners for the IPO, with Banco Bilbao Vizcaya Argentaria SA and Espirito Santo Investment as co-lead managers.

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