ABN revises Iittala

Finnish designer homewares company Iittala had to revise the bookbuilding terms on its IPO last week despite being well covered within the price range. The revision to a fixed price sale and extension of the deal came as main seller ABN AMRO Capital decided it was unwilling to proceed at the low end of the price range.

The book had been covered at the low end of the €8.50–€10.50 range with several days of bookbuilding remaining but sensitivity was high limiting pricing to the lower half of the range. Despite the ability to close and price the IPO it was halted and relaunched with a fixed price of €9.50, the middle of the price range. Leads ABN AMRO, Rothschild and Nordea did not give any guidance on coverage at this stage.

The failure to proceed led to criticism from some rival bankers. One head of a European ECM said launching with terms unacceptable to the seller misled investors and the market. “This is a very poor and disingenuous practice and should be made illegal,” he said.

Yet the logic was perfectly clear for this strategy. The market was volatile and attracting investor attention, especially international, to a small Finnish deal is not easy. As a result, a range with a very attractive valuation at the bottom was intended to tease investors in at the start. Normally if pricing is necessary at the bottom the seller would swallow hard and accept it, but not here.

Pricing has been fixed at €9.50, with other terms remaining the same. The base deal includes 1.6m shares from the company and will raise a total of €101.7m. Existing shareholders also provide the 1.1m share greenshoe.

The deal has relied on local investors for price leadership, but the seller believes that this group has been low-balling on valuation. The hope is that offering the stock at a fixed price will force investors to pay a tighter discount to peers or else the company will not list.

The company is seen as a high quality asset and leads expect the deal to succeed under the new terms.

ABN AMRO acquired the Finnish homeware design company in 2004. Other investments by ABN in Finland include Saunatec Group, the manufacturer of steel formworks acquired in 2006.