BEST IPOs: Selling telecoms in a storm
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BANKING

BEST IPOs: Selling telecoms in a storm

Deals of the Year


Issuer: Swisscom
Date: October 1998
Amount: Sfr8.6 billion ($6.3 billion)
Global coordinators: JP Morgan, Warburg Dillon Read


Early October was hardly the most favourable time last year to issue over $6 billion of equity. Stock prices in Europe and North America were falling as the shock waves from Russia’s domestic debt default spread from emerging to developed markets. But Switzerland’s first privatization had been planned for over 18 months and the government was not going to let the small matter of a 20% fall in Swiss stock prices over the preceding month derail the programme.

In the event, the government scaled back the offering, on which Warburg Dillon Read and JP Morgan acted as global coordinators, from 49% of the state-owned telecoms operator to 30%. The price was also a little lower than had been expected a few weeks earlier. The government finally settled for a price range of Sfr330 ($240) to Sfr410 a share and the deal was done for Sfr340, bringing in Sfr8.6 billion.

Since then, European stock prices have recovered and Swisscom’s has risen in line with the market. At the beginning of 1999 the stock was trading around Sfr550 a share.


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