When Permira acquired its stake in Munich-based pay-TV operator Premiere in 2003, managing director Thomas Krenz said the company had cast off the baggage of the past. The recent IPO that allowed Permira to cut its stake in Premiere from 54.8% to 23.7% proves how right he was.
The IPO closed two weeks ago with extraordinary subscription levels. The offer comprised 42.1m shares, including the greenshoe, giving it a free float of 51.3%. With a total of 82m shares outstanding the initial price range values the company at €2.3bn, with Permira still its largest single shareholder. Chief executive Georg Kofler now holds 13.9%.
The total deal size was €1.179bn. The 12m primary shares in the offer provided the company with €336m for investment, including the renewal of exclusive football coverage. The secondary stock was provided mainly by Permira.
Appetite for the stock was highlighted on the first day of trading. Premiere closed at €31.80, up 13.6%, on volume of more than 19m shares. By March 16, this had come back in slightly to €31.50.
Premiere took precautions against the difficult German IPO market. It used a syndicate of 11 banks, but did not hold back when setting final pricing. The company had set a price range of €24–€28 for the offer, which was below initial expectations of around €30 but still seen as ambitious. Demand was sufficient to ensure that the offer priced at the top of the range and still generated an oversubscription.
Final pricing did knock out some demand, reducing the overall coverage from 12.3x at the bottom of the range to 11.4x at the top. The institutional tranche was 16x covered, and allocations were difficult – especially as the company wanted 30% of the deal to go to retail investors and also wanted to give preference to TV subscribers.
Premiere subscribers received 75% of their orders, with other retail investors receiving 42%. Institutional investors were dealt a harsher hand, with 75% of institutional orders not allocated any stock and others heavily scaled back.