After a start to September that has seemingly brought only negatives, there is finally some good news for ECM bankers. Spanish lottery operator La Sociedad Estatal Loterias y Apuestas del Estado will kick off pre-marketing next week, with analysts expected to be in Madrid, London and Paris. Both analysts and the ensuing roadshow will also travel to the US.
A standard two weeks of pre-marketing plus two weeks of roadshows would put the close of bookbuilding and pricing around October 14, with trading expected in the week beginning October 17. There was always time pressure for this deal to take place in 2011 because this effectively meant the deal needed to close before national elections on November 20. One person involved at the earliest stage of the deal said the timetable had always been extremely ambitious, ie short.
Balls go into the lottery drum before the start of the draw for Spain’s Christmas Lottery “El Gordo” (The Fat One) in Madrid in 2010
The Spanish government is expected to sell around 30% of Loterias, with a proceeds target of €6.5bn–€7.5bn.
Leads are still relatively cautious, noting that it is easy enough to launch a deal but harder to price one successfully.
The likely heavy involvement of retail in the book, especially after the less powerful brands of Bankia and Banca Civica were about 60% sold to retail, has prompted several bankers to comment that a successful deal is not certain to revive the European IPO market – reflecting the level of pessimism that has pervaded some ECM teams. However, even if the majority of the deal does go to retail that will still require several billion euros of institutional demand to get done.
Given the time and energy banks spent getting in the syndicate, including an original beauty parade involving more than 20 participants, Loterias is the one deal that had to come. Yet a small fee pot split many ways means it will not alone stop banks missing budgets for the whole year.
BBVA, Credit Suisse, Goldman Sachs, JP Morgan, Santander and UBS are joint global co-ordinators, with Citigroup, Deutsche Bank and Morgan Stanley as joint bookrunners. Rothschild is advising. A third tier of banks is understood to have been appointed as ‘junior bookrunners’.
