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Bankia delays prospectus amid IPO nerves

Source: Reuters - Thu 23rd Jun 2011

Spain's Bankia has delayed publishing its listing prospectus, sources said, with market nerves over Greece adding to downward price pressures and testing the lender's resolve to get the deal done.

Sources close to the savings bank's offering said the prospectus, which had been due to be published on Wednesday, would now be issued early next week, with July 15 targeted for the first day of stock market trading.

Investors, jaded by the often poor aftermarket performance of companies which have floated this year, are increasingly demanding big discounts to take part in new offerings. "The process is going ahead, without question, and the range of prices we are looking at is between 0.45 and 0.65 times book value," said a source at one of the banks co-ordinating the initial public offering (IPO).

Concerns over a possible Greek debt default have added to volatility in an already tough European market for new offerings, which has seen more than 20 companies pull market debuts this year.

One Spanish fund manager said Bankia, Spain's biggest savings bank and which was formed from the merger of seven regional banks, may have to price as low as 0.35 to 0.45 times book value to get sufficient interest.

Comparable domestic Spanish banks such as Banesto , Sabadell and Banco Pastor trade at around 0.6 to 0.7 times book value.


Bankia's IPO, aimed at raising up to 4 billion euros to plug a capital hole, is a gauge of the success of Spain's reform of its banking sector enacted earlier this year to assure markets on the stability of its financial sector.

"The question with Bankia remains whether the political need to get it through is so big that they don't care about price," said one London-based analyst.

Worries over Greece, together with holidays in Spain on Thursday and Friday, had contributed to a delay in the publication of the prospectus, the sources said.

Another sticking point was negotiations over the terms of the underwriting agreement, one banking source said.

The Spanish stock market regulator had not yet received the prospectus from Bankia for approval, a spokeswoman said.

Spain's blue-chip index has fallen over 6 percent since the start of May on renewed fears over the future of the euro zone as Greece thrashes out the terms of a debt restructuring. Competing with Bankia in a dash to attract private capital is savings bank Banca Civica, which aims to raise 900 million euros from floating a stake of around 40 percent. Bankers expect domestic demand to be key to the savings banks getting their listings away, with international investors likely to be more cautious. Bank of America Merrill Lynch, Deutsche Bank, JP Morgan, UBS and Bankia itself are running Bankia's IPO.

Among underwriters to the deal are Banco Sabadell, Bankinter, Barclays, the Spanish savings bank association CECA, Santander and Renta 4, as shown in a syndicate briefing document seen by Reuters.

Co-leaders on the deal include BBVA, CaixaBi, Commerzbank, Mediobanca, Societe Generale and Unicredit, the document showed.

Bankia declined to comment.

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