* Companies set to price shares at top of guidance range
* Order books on offerings closed early due to strong demand
* All eyes on aftermarket trade - industry sources
By Kylie MacLellan
LONDON, March 20 (Reuters) - An eight-month drought in European initial public offerings is set to be broken on Tuesday as Dutch cable firm Ziggo and Swiss-based DKSH not only complete their share sales but price at the top end of guidance, boosting hopes of a pick-up in activity.
Ziggo, which on Monday increased the size of its listing due to strong investor demand, could raise as much as 925 million euros ($1.2 billion) for its selling shareholders, making it the largest European IPO since Spanish savings bank Bankia's 3.1 billion euro sale last July.
European companies have largely put their listing plans on hold since the middle of last year as the euro zone debt crisis rattled stock markets and sent investors running for cover.
Even during the first half of 2011, when the market was more active, many firms pulled IPOs due to lack of investor interest, or slashed their offer price to scrape over the finish line.
In contrast both Ziggo and DKSH, which helps companies market and distribute their goods in Asia, were able to close the order books on their share sales early.
Ziggo is set to price its offering at 18.50 euros per share, the top of its 16.50 to 18.50 euro range, while DKSH is expected to price its sale at 48 Swiss francs ($52.7) per share, compared with initial guidance of 42 to 48 francs, sources close to the deals said.
"They are in resilient sectors with very strong cash flow generation," said one person working in capital markets. "These are mature assets that are at a decent yield play."
Ziggo, which reported revenues of 1.48 billion euros and earnings before interest, tax, depreciation and amortization (EBITDA) of 835 million in 2011, has said it is targeting a total dividend payout of 220 million euros this year.
From 2013 onwards Ziggo plans a dividend of at least 50 percent of free cash flow to equity, while DKSH said in its offering circular it generally distributed 25-35 percent of its net profit to shareholders in any given financial year.
Investors were also attracted to DKSH by its exposure to fast-growing Asia, sources close to the deal said.
DKSH, which lists Nestle, Roche and GlaxoSmithKline among its clients, posted a 26 percent rise in post-tax profit to 152 million francs in 2011, while sales rose to 7.3 billion. It made more than a third of its sales in Thailand and just over a quarter in China.
The firm's offering of up to 30 percent of the company could raise as much as 900 million Swiss francs for its founding shareholders, while Ziggo's sale of as much as 25 percent will see its majority owners, private equity firms Cinven and Warburg Pincus, reducing their stakes.
Neither sale includes any new shares.
But those working in equity capital markets said the key factor for the future health of the IPO market would be how well the pair trade in the aftermarket. DKSH makes its debut on Tuesday, while Ziggo will begin trading on Wednesday.
Espirito Santo said in a research note that its estimated fair value for Ziggo, based on rolling forward its net debt to the end of 2012, was 20.31 euros per share, offering a potential upside of 9.8 percent at the top end of the price range.
J.P. Morgan and Morgan Stanley are the joint global coordinators for Ziggo's IPO and joint bookrunners along with Deutsche Bank and UBS.
Deutsche Bank and UBS are also involved in DKSH's sale, as joint global coordinators. They are also joint bookrunners with Berenberg Bank and Credit Suisse. ($1 = 0.7592 euros) ($1 = 0.9110 Swiss francs) (Editing by David Cowell)