Warburg Pincus monetises Zentiva stake

Zentiva, the Czech generic pharmaceuticals company that provided the only IPO ever to have taken place in the country, was the subject of a series of quick deals last week as Warburg Pincus reduced its holdings in the group. First, there were two blocks of the stock crossed in the local market, then an international accelerated bookbuild was launched overnight on Monday September 19 by Merrill Lynch.

The local market deals were for 5.2m and 1m shares, priced at Kc1,040 apiece. The stock is thought to have gone to just a few names. The bookbuild through Merrill comprised 4.5m shares and was priced at Kc1,025. The price was a 4% discount to the Monday close, but an 8% discount to the previous Friday. Proceeds were Kc4.6bn (US$191m).

The shares were placed almost entirely with some 40 international accounts. In the company’s IPO in June 2004, about 85% of the deal was sold to international investors, but much of that liquidity has since returned from the GDRs to the locally listed shares. Warburg Pincus returned with a Kc2.4bn deal in May this year.

Zentiva is very cash-generative, and the momentum on the stock is so strong that valuation against comparisons was not the main concern of those accounts that bought into the deal.

The stock price has doubled over the past year and has risen more than 25% since mid-August, when it stood at just below Kc900. Since then, Zentiva has announced the acquisition of Sicomed, the leading generics company in Romania.

Following last week’s transactions, Warburg Pincus retains 20% of Zentiva. The local deals represented 18% and the international deal 11%. Following the international deal, Warburg Pincus agreed to a 120-day lock-up. The shares closed at Kc1,061 on Tuesday but had reached Kc1,135 by Thursday’s close.