We just left one of the hottest month in terms of IPOs. Indeed, at NYSE and Nasdaq we saw 2 unicorns’ IPO’s: Pinterest and Zoom, that both did better than Lyft (Uber’s competitor), whose IPO took place at the end of March. Specifically, Pinterest, the social network of photos/videos/images, fixed a placement price at $ 19 price of quotation, 2 dollars above the maximum of the range expected, allowing the company of photos to raise 1,43 billions for a value of company for about 12,6 billions. On the other hand, we have Zoom Video Communications, with a price of $36 per share and a company’s value of 9 billions, closing with a +72% (we talked about it here https://cattolicaglobalmarketsmagazine.com/2019/04/23/initial-public-offering-ipo-cosa-e-successo-allunicorno-delle-telecomunicazioni/).

After this brief overview on what happened overseas, let’s focus on Piazza Affari, where the best IPO of 2019 took place: Nexi. But before doing a thorough analysis of the operation, enable me to take a step back…

History

Nexi was born in 2017 after the merger between ICBPI and Cartasì, with the aim to become the leader of the digital payment system sector (also known as paytech).

The group (with the holding Nexi Spa) is composed by 3 companies:

  • Nexi Payments Spa, which works alongside banks to provide them with card-payment services, digital payment acceptance systems, and innovative products and services; with merchants to ensure authorisation and payment-management services, while also offering customer care, fraud prevention and management services;
  • Mercury Payments Services, leader in the field of acquiring, with over 370,000 POS terminals on the Italian territory;
  • Help line Spa: Helpline is the Nexi Group contact centre that provides customer service, credit recovery and telemarketing support. Helpline operates 7 days a week, 24 hours a day. It is a modern customer care centre staffed by highly qualified, multilingual personnel, capable of using all the latest communication tools.

 

In other words, Nexi Group is the main group in Italy in the paytech. Just to give some numbers: at the end of 2018, it managed, with about 150 partner banks, over 41 millions of payment cards for around 30 million cardholders, served around 890,000 merchants, and about 6 billion acquiring and issuing transactions were processed. The Group conducts its business mainly through the following three business lines: Merchant Services & Solutions; Cards & Digital Payments; and Digital Banking Solutions. 

The IPO:

On March 1st of this year, Nexi Group announced its Initial Public Offering and then (on March 18) made the details of the offering known, sharpening that the free float required for listing purposes is through a private placement, reserved for qualified investors.
Going down to the operations, the press release (the approval of CONSOB on the Prospectus for the admission to trading of Nexi, 29 March) reads that the offer comprises:

  • Newly issued Shares (amounting to a total of about €700 million) resulting from a capital increase with the exception of option rights;
  • Existing Shares, where Mercury UK Holdco Ltd (vehicle of private equity funds Bain Capital, Advent and Clessidra) will sell about 125 millions of shares while Banco BPM, Banca Popolare di Sondrio, Banca di Cividale, Credito Valtellinese and Iccrea Banca will sell about 21 millions shares.

Moreover, a Green-shoe option (an option to purchase a number of additional shares at the offer price representing up to 15% of the Shares sold in the Offering) is mentioned to be provided in connection with the offering by Mercury Holdco and the indicative non-binding price range had been set between €8.50 and €10.35 per Share, during the offer period, from March 29 to April 11, and then set at €9 from April 12.  The offer price values the company to € 7.3 billion (“Enterprise Value) for a corresponding 17.2x EV / EBITDA multiple with a capitalization of Nexi of € 5.7 billion, including the Capital Increase amounting to €700 million, with a free float of Nexi shares of 35.6% of the share capital, which could be increased up to 40.9% following the possible exercise of Green-shoe Option, of which we’ve just been discussed before. Furthermore, the offering comprised 223,405,054 Shares of which 77,777,777 Shares deriving from a capital increase by Nexi.

Just to see how the company performed, in the first day of landing in Piazza Affari was not a success: the company lost 6.22%, closing at €8.44 per share, and at €8.04 at the end of April. The CEO, Bertoluzzo, commented saying that “we are only at the first day of a long trip!”.

To conclude this analysis, it’s important to say that the operation, which saw BofA Merrill Lynch, Banca IMI, Credit Suisse, Goldman Sachs International and Mediobanca as joint global coordinator e joint bookrunner, while Banca Akros, Barclays Bank PLC, Citigroup Global Markets Limited, HSBC, MPS Capital Services, UBI Banca, UBS Investment Bank e UniCredit Corporate & Investment Banking as joint bookrunner and Banca IMI and Banca Akros as sponsor, was finalized to reduce financial indebtedness, with the aim of achieving at the end of 2019 a ratio of net financial indebtedness to Normalised EBITDA between 3 and 3,5x. No dividends will be distributed for this year.

We cannot remind that Uber is going to be public the next month and it represents a huge IPO to keep an eye on….but would you go long or short on these “unicorn” stocks?

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