The Grapeclose consortium of Apax Partners and Permira kicked off the IPO of satellite operator Inmarsat on May 24. Bankers speculate that the deal could be worth around £400m for the flotation of one-third of the company. The bulk of the deal is likely to be the sale of new shares rather than a large disposal by the private equity owners. Grapeclose won the bidding for Inmarsat in 2003 with an offer of US$1.538bn.
The run-up to the IPO has been characterised by a slightly unusual preparatory stage, during which five banks competed for the bookrunner roles through several rounds of pitching. An element in this was the feedback that banks were able to get from pilot-fishing meetings with key potential investors. The final four bookrunners are JP Morgan Cazenove, Morgan Stanley, Lehman Brothers and Merrill Lynch, with CSFB no longer involved.
Satellite company flotations have often experienced tough debuts. KKR’s US$900m IPO of PanAmSat priced below the indicated range and traded down. That deal closed in March and suffered partly because KKR was bringing the company public so soon after acquiring it in August 2004. But in recent weeks the stock has recovered somewhat, and is now trading around US$18.70, just above the US$18.00 IPO price.
In early May, Blackstone Group floated another satellite operator, New Skies Satellite Holdings, just six months after acquiring the company. It was obvious in that deal that investors were looking for a very high yield. The shares were priced at US$16.50, below the US$18–$20 range, pushing the yield to 11.2%, well above PanAmSat’s 8.6%. The IPO totalled US$196m and the shares are now trading at around US$17.40.
Pre-marketing for the Inmarsat IPO began on May 23 and roadshows could begin on or around June 1. On that basis, the deal would be priced around June 17.°