Polish Biggest Private IPO Set to Price at Low End of Range

  • Polish mobile carrier Play’s offer seen worth $1.2 billion
  • Orders below 36 zloty per share risk missing: updated terms

Play Communications SA is set to sell shares in Poland’s largest initial public offering by a private company near the low end of its preliminary price range.

The country’s second-biggest mobile phone operator has its order books fully covered within a 36-38 zloty per-share range, compared with an initial guidance of 34-44 zloty, according to terms for the deal obtained by Bloomberg. That values the IPO at as much as 4.6 billion zloty ($1.2 billion), with the book-building for as many as 121.6 million shares offered by Greece’s Olympia Development SA and Iceland’s Novator Partners LLP, slated to end at 1 p.m. in London. Orders below 36 zloty a share risk missing, updated terms sent on Thursday showed.

Since starting its operations in Poland 10 years ago, Play has attracted 14.3 million users and overtook competitors such as Deutsche Telekom AG’s mobile unit by offering attractively priced services and hiring a slew of celebrities for its advertising campaigns. The Warsaw-based company has also capitalized on market deregulation, which challenged long-established operators like Orange Polska SA, forcing them to provide their network to rivals and cut prices.

Play is luring potential investors with a promise of ample dividends and increasing earnings, even as it pledges to improve debt metrics. The carrier plans to pay out about 650 million zloty for 2018 and later seeks to allocate as dividend 65 percent to 75 percent of adjusted Ebitda less cash capital expenditures. Risks include whether Play will maintain its management, despite an incentive program, and sustain its growth and dividend rates, according to Haitong Bank SA.

The transaction, initially targeting proceeds of as much as 5.21 billion zloty, comes at a time when some offerings in central Europe have experienced setbacks. Hungarian hauling company Waberer’s International Nyrt. scaled down its IPO, Raiffeisen Bank International AG postponed a sale of shares in its Warsaw-based unit on tepid demand and Polish debt collector GetBack SA slashed its offering price to the bottom end of the range.

Warsaw’s WIG20 Index, a gauge of the biggest and most liquid companies, trades 3.1 percent below its peak reached in May, trimming this year’s advance to 20 percent, still one of best performers among global stock indexes. If Play’s deal succeeds, the value of IPOs held in Warsaw this year will amount to as much as 7.7 billion zloty, which would be the highest in six years.

— With assistance by Gaurav Panchal, and Tiago Ramos Alfaro

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