LONDON/MILAN (Reuters) - Nexi’s advisers are working flat out to list the Italian banking services provider in April, hoping to complete Europe’s biggest share sale of 2019 while market conditions allow, sources told Reuters.
Bank of America, Goldman Sachs, Credit Suisse and Mediobanca are among 13 banks preparing Nexi’s initial public offering (IPO) ahead of potential political upheavals in Italy in the run-up to May’s European Parliament elections, four sources familiar with the process said.
The advisers are targeting an overall valuation of 8 billion euros ($9 billion) for Milan-based Nexi, which could become Europe’s second-biggest IPO since 2017 when Pirelli relisted in Milan, Refinitiv data shows.
Nexi’s private equity owners - Bain Capital, Advent and Clessidra - are determined to list it with a valuation of at least 7.5 billion euros, more than 15 times its core earnings.
But European IPO proceeds are at their lowest since records began, with only $76.5 million raised this year compared to $2.7 billion in the same period in 2018, the Refinitiv data shows.
Siemens pulled out Europe’s biggest IPO last year, raising 4.2 billion euros from selling a 15 percent stake in its Healthineers unit, the world’s largest maker of medical imaging equipment.
Nexi’s banks are aiming to list no less than 25 percent of the company in Milan in mid-April, the sources said, adding the Easter break is their cut-off date to get the IPO away.
While a final decision has yet to be made, the listing may rise to 35 percent, with a so-called greenshoe option allowing for extra shares to be issued, another source said.
Nexi’s executives will start holding “early-look” meetings with investors in London on March 4 against an uncertain political backdrop as Italy’s 5-Star Movement struggles while its right-wing League government coalition partner goes from strength to strength under charismatic leader Matteo Salvini.
A break-up of Italy’s ruling coalition could spook investors, making capital markets activity in the eurozone’s third biggest economy harder to carry out.
Despite this, Nexi will kick off on an official roadshow late next month, soon after publishing its intention to float on March 18, one of the sources said.
The roadshow, which will mainly target London-based investors, has already whetted the appetite of large investment funds who have suffered a slowdown in IPO activity this year.
Preliminary meetings with investors, also known as early-look marketing, will take place in London on March 4 in a bid to inform the broadest possible range of potential investors about the planned offering.
Nexi was sold to three private equity investors in 2015 in a deal valuing the company - previously known as Istituto Centrale delle Banche Popolari - at 2.15 billion euros.
It has since grown through acquisitions to become the dominant provider of card payments services in Italy, where the industry is growing at almost 10 percent a year as credit cards are still less widespread than in France or Britain.
Euromonitor International says card payments in Italy account for 26 percent of total transactions compared to 45 percent in Western Europe and 69 percent in Britain, making Nexi an attractive investor opportunity.
The firm’s core earnings are forecast to surpass 500 million euros in the next year.
If market volatility or political instability hinders plans for an IPO, Nexi’s owners have also outlined an alternative exit, a merger with a European rival such as Denmark’s Nets or Britain’s Worldpay, the sources said.
Nets and Worldpay were not available for comment.
While a listing is the priority, the sources said Nexi’s owners have already sounded out appetite for a merger, especially with Nets, and believe there is scope for talks should the IPO fail.
Bain and Advent bought Worldpay from Royal Bank of Scotland in 2010 and turned it into Britain’s largest payment processing company, listing it in 2015. Two years later it was merged with U.S. rival Vantiv.
Bain and Advent also took control of Nets in a $3 billion deal in 2014 and listed it in 2016. Another private equity fund, Hellman & Friedman, then bought the Danish firm for $5.3 billion in 2017.
Reporting by Pamela Barbaglia; Editing by Alexander Smith