Portugal’s Postal Service Rises as Five-Year IPO Dearth EndsJoao Lima
Portugal’s mail service, CTT-Correios de Portugal SA, rose on the first day of trading after the 493-year-old company held the country’s first initial public offering in five years.
The stock climbed 0.4 percent from the IPO price of 5.52 euros to close at 5.54 euros in Lisbon, giving the company a market value of 831 million euros ($1.14 billion). Earlier in the day, the shares jumped as much as 7.8 percent.
Portugal will now try to sell an insurer and a waste-management company as it complies with the terms of a 78 billion-euro bailout from the European Union and International Monetary Fund that requires the government to dispose of assets. The U.K. sold a majority stake in British counterpart Royal Mail Plc in October at a price that some lawmakers said was too low. That stock jumped 38 percent in its trading debut.
“Investors are buying CTT shares to take advantage of similar successful IPOs by other European mail service companies,” said Joao Queiroz, a trader at Banco Carregosa SA’s Go Bulling brokerage in Lisbon. “CTT’s attractive dividend payout policy may also be boosting interest in the stock.”
The company plans to pay dividends representing at least 90 percent of distributable profit in 2014 and in the following years, according to the IPO prospectus. Nine-month net income rose 28 percent to 45.2 million euros.
The Portuguese government raised about 579 million euros from the disposal of a 70 percent stake in Lisbon-based CTT. Of the 105 million shares offered, 21 million were sold to individual investors through the IPO and the rest went to institutional investors. State holding company Parpublica retains a 30 percent stake in CTT.
Secretary of State for Public Works, Transport and Communications Sergio Monteiro said last month that the government would raise more money through an IPO than through a direct sale of the postal service. The highest proposal the government received before it decided on an IPO valued the company at 600 million euros, he said.
“This privatization, carried out in the stock market, not only maximizes the revenue obtained by the state without compromising the strategic objectives of the company, but also opens the way for other companies to sell shares or finance themselves through the stock market,” Economy Minister Antonio Pires de Lima said yesterday.
Binding bids for Caixa Geral de Depositos SA’s insurance unit are due by Dec. 16, Parliamentary Affairs Minister Luis Marques Guedes said today. The government also plans to sell Empresa Geral do Fomento, the waste-management unit of water utility Aguas de Portugal.
Portugal may also try to sell airline TAP SGPS SA again in 2014, Monteiro said on Nov. 19. The government last year rejected an offer from Brazilian investor German Efromovich, citing lack of financial guarantees for the sole bid.
The country has been planning to sell TAP for more than a decade. Swissair Group agreed to buy a stake in 1999, then backed out in 2001, later declaring bankruptcy.
Portugal completed the sale of airport operator ANA-Aeroportos de Portugal SA for 3 billion euros to Vinci SA, Europe’s biggest builder, in September. The government has also sold stakes in utility EDP-Energias de Portugal SA and in energy grid operator REN-Redes Energeticas Nacionais SA. The country’s last IPO was when EDP sold a stake in renewable-energy unit EDP Renovaveis SA in June 2008.
CTT, which is expanding its express-package delivery service to new markets as consumers purchase more online, said on Nov. 29 that it obtained a license from the Bank of Portugal to also operate as a bank. CTT’s logo still appears on mailboxes and buildings in some of Portugal’s former colonies in Africa.
Caixa Banco de Investimento SA and JPMorgan Chase & Co. were global coordinators and bookrunners for the IPO, with Banco Bilbao Vizcaya Argentaria SA and Espirito Santo Investment as co-lead managers.