It had been years since the Italian Stock Exchange enjoyed such a favorable moment and, given the interest of investors in our market, of companies so in need of "fresh capital".
In the first six months of 2014, there were no less than twelve placement operations or IPOs (Initial Public Offering), for a total value of 2,7 billion euros. As you know, Advise Only takes nothing for granted, so if you don't know anything about finance but are curious, don't worry: keep reading.
What is the IPO
Literally means "Initial Public Offering” and consists of the procedure by which a private company is listed on the Stock Exchange for the first time. This type of operation involves various subjects (consultants, lawyers, banks), who take part in the numerous phases of the process. Simplifying, we can identify three.
1. Preparation stage
This is the longest and most expensive phase of the process, in which the various souls of the process (lawyers, auditors, consultants, financial advisors) work to satisfy the formal requirements (Borsa Italiana, Consob) and to present the company to investors. In fact, together with the financial data, management, the company's strategy and the associated risks are also presented.
2. Enhancement of the company and collection of orders
Among the most delicate phases is that of evaluation. Based on the financial analysis carried out byadvisor, in agreement with the company's management and with the intermediary (even more than one) who takes care of the placement, a price bracket is identified (ie: a minimum and a maximum price) at which to have the new shares subscribed. Once the price range has been identified, the intermediaries take care of collecting the orders from the investors.
3. Final price and quotation.
At the end of the placement period, the parties (company, advisor and intermediaries) establish the final sale price and the new shares are awarded and deposited in the securities accounts of the various investors. Once the transaction has been concluded and the final purchase price has been established, the company will have the right to be listed and the shares will begin to be freely traded on the Stock Exchange.
Fineco on the Stock Exchange
After Cerved and Anima, the time has come Fineco. Thursday 26 June closed the placement period of the Italian online bank par excellence, which will land on Borsa Italiana on 2 July. We summarize below the conditions of the offer.
. The majority shareholder is Unicredit, who intends to list the 30% in the company, of which 10% reserved for investors retail. This operation allows Unicredit to raise approx 800 million euro and to retain full control of the company.
. The price range is 3,5-4,4 euros per share, for a total valuation including of2,1-2,6 billion euros.
Fineco certainly has one behind it story of successo: it is an innovative and financially solid company which, in just a few years, has acquired an enviable customer base (it is the first broker in Europe by number of customers and has a conspicuous network of promoters).
Operators' opinion is rather positive and the solidity of the business model is not questioned. Insiders wonder about valuation and there are two schools of thought: there are those who bet on the future growth of profits and those who instead believe that under the current supply conditions (€3,4-4,4 per share) other traditional banks are more interesting.
Although there are no truly comparable companies (except those indicated in green in the graph), Fineco in terms of intermediation margin ("banks' revenues") is among the smallest companies within the European financials sector, but with a rather high valuation (currently the sector has a P/E around 20).
The Italian market likes Fineco which has that innovative character that investors are looking for. However, in order to carefully weigh one's choice, one must also consider two other aspects that are relevant in my opinion:
1. Fineco is a company that operates only in Italy;
2. there is no clear dividend policy (decisive in the long term), which is subject to the discretion of the majority shareholder (Unicredit).
