Pop. Vicenza Sets Symbolic IPO Range as Investors Lack Interest

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Banca Popolare di Vicenza SpA, the Italian bank seeking to raise as much as 1.8 billion euros ($2 billion) to ensure its survival, set an indicative price range for its initial public offering after investors showed little interest.

The bank will offer stock at 10 cents to 3 euros apiece, it said in a statement on Tuesday. Pop. Vicenza will start gathering orders for the IPO this week and shares should begin trading around May 3, according to terms seen by Bloomberg.

“We did not gather sufficient expressions of interest to set a specific valuation range in accordance with standard market practice” in pre-marketing, the bank said. Pop. Vicenza still set an indicative price for the institutional investors, given “the public interest of the capital increase.”

The price range implies that the stock will trade between 0.38 times and 0.45 times its tangible book value, the company said. That would be higher than competitors such as Banco Popolare SC, Banca Carige SpA and Banca Monte dei Paschi di Siena SpA.

“The expected pain is now visible,” Fabrizio Bernardi, an analyst at Fidentiis Equities, wrote in a note Tuesday. “‘The valuation range implies multiples in line with Italian banks with a low single-digit return on tangible equity, which means that underwriting the capital hike is, financially speaking, true nonsense”.

Popolare di Vicenza is seeking to raise money to shore up its balance sheet as the cooperative lender transforms into a joint-stock firm. The European Central Bank warned that without a capital increase, the lender would need to draw on creditor funds to bolster buffers. The bank disclosed a 1.4 billion-euro loss for last year and reduced its common equity Tier 1 ratio to 6.65 percent, well below the minimum target set by the ECB of 10.25 percent.

UniCredit SpA, the sole guarantor of the IPO, on Monday said the government-orchestrated fund Atlante, set up to assist troubled lenders, agreed to buy any unsold shares amid muted investor interest.

Current stockholders, who are mainly customers, have already lost most of their investments on writedowns that have shaved about 90 percent from the book value as the bank tapped investors twice for 1.2 billion euros between 2013 and 2014.

— With assistance by Jerrold Colten, and Francesca Cinelli

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