March 29, 2019 / 11:08 AM / 4 months ago

UPDATE 2-Debt-laden payments firm Nexi draws strong demand on first day of IPO

* Company to list up to 43.2 pct of capital

* Market value of 6.4 bln euros at top of price range

* Debt to fall to 1.7 billion euros after IPO

* Market debut expected on April 16 (Adds details of demand)

By Andrea Mandala and Valentina Za

MILAN, March 29 (Reuters) - Italian payments group Nexi’s initial share sale drew strong investor demand on its first day, with bookrunners saying orders exceeded the amount on offer in what is likely to be one of Europe’s biggest listings this year.

Nexi, which is striving to cut its debt, said on Friday it planned to list up to 43.2 percent of its capital in an offer which at the top of the price range of 8.5-10.35 euros would value it at 6.4 billion euros.

The bookrunners said the offer had been oversubscribed, including the so-called greenshoe option allowing for extra shares to be issued.

Books for the offer are due to stay open until April 11, but could close earlier. The company’s market debut is expected on April 16.

Controlled by private equity firms that bought it from a group of Italian banks in 2015, Nexi operates in the fast-growing payments business, which McKinsey expects to reach $3 trillion a year in revenue by 2023 as more people ditch cash.

In its IPO prospectus Nexi said it expected to reap net proceeds of 684 million euros, while its shareholders could net up to 1.49 billion euros.

Nexi said it would use cash from the new share sale as well as 1.5 billion euros in fresh financing provided by a group of banks involved in the IPO to reduce debt.

In particular, it will partly repay a 1.375 billion euro bond maturing in 2023 as well as a privately-placed issue.

Nexi said in the prospectus it had 2.6 billion euros in debt at the end of 2018 on a pro-forma basis, costing the group five times its pro-forma net income in interest payments.

“The significant financial charges stemming from the group’s debt could impair, going forward, the group’s ability to invest in key areas such as technological infrastructures ... and keep up with innovation in its sector,” Nexi said.

The IPO will allow the company to cut its debt to 1.7 billion euros.

Incumbents such as Nexi face competition from newcomers tapping new technologies for alternative payment methods.

The group said debt commitments limited its ability to pay dividends and it would not distribute 2019 profit to shareholders. In the longer term it said it was targeting a payout ratio of 20-30 percent.

Nexi is issuing new shares for up to 700 million euros in the IPO while private equity owners Bain Capital, Advent and Clessidra will reduce their combined 94 percent holding to as low as 56.5 percent by listing existing shares.

Italian banks Banco BPM, Credito Valtellinese , Popolare di Sondrio are set to sell part of their stakes. ($1 = 0.8917 euros) (Reporting by Valentina Za and Andrea Mandala; Editing by Alexander Smith and Kirsten Donovan)

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