Bookbuilding for permanent funds

Bookbuilding on the IPO of European buyout fund European Capital (ECAS) began on April 18. The fund is floating on the LSE’s main market and is looking to raise €125m, plus a greenshoe of 15% of the deal, by issuing up to 12.7m primary shares.

The price range has been set at €9.84–€12.00, which will mean an opening market capitalisation of €1.0bn–€1.27bn. The range values the shares at 1x–1.2x NAV at issue.

The fund will be managed by a subsidiary of American Capital Strategies (ACAS), which is also the majority owner with 75.5% of the stock pre-IPO. The free-float post-IPO is expected to be about 33%, since some institutions already have stakes of more than 1% following a private placement in 2005.

The fund’s management has split into two teams in order to do roadshows, one in London and Continental Europe and the other in the US, where the Nasdaq-listed ACAS has a strong following among investors.

ECAS specialises in buyouts with an enterprise value of €50m–€400m, as well as mezzanine financing, and expects to benefit from the expertise and experience of ACAS’s European operation. Books will be open for the next two weeks and pricing is due on May 3. Citigroup, JPMorgan Cazenove and Merrill Lynch are joint bookrunners.

JPMorgan Cazenove is also leading a capital increase for London-listed Bear Stearns Private Equity. The company has set itself an ambitious target – which is clearly a maximum figure rather than an expectation – of raising US$400m, against its existing market capitalisation of just US$150m. Subscription runs until April 27, with the shares trading from May 2.

The shares are priced at US$1.53 each, which represents the US$1.50 NAV at launch and a three cents charge per share to cover the deal costs. The shares were last week trading comfortably above NAV at US$1.57. JPMorgan Cazenove is sponsor of the placing and a placing agent with Bear Stearns, HSBC and Migdal Hitum Ve’Kidum Asakim.