Allegro in every way
An e-commerce stock securing a premium valuation amid frenetic demand for its IPO is certainly exciting, but doesn’t automatically stand out when government stay-at-home orders meant tech IPOs were a hot ticket in 2020.
Allegro’s September IPO is nonetheless exceptional as it lived up to its name by going from request for proposals to pricing in 100 days without meeting its financial advisers and while listing in its home market of Poland rather than a more obvious choice of London, Amsterdam or the US. The previous big IPO in Poland was the privatisation of PZU, a decade earlier.
The online retailer comfortably broke the record for a Polish IPO with its Z10.6bn (US$2.7bn) float that priced at the top of guidance, with a small upsize, and shares surged 63% on their first day of trading.
Lazard was the adviser and Goldman Sachs and Morgan Stanley were global coordinators.
They all spoke to key investors about the choice of listing venue and found surprisingly few large accounts unwilling to accept the quirks of Warsaw with its two-week settlement period.
Joint bookrunners were Barclays, Bank of America, Citigroup, PKO and Santander.
Investors were fighting for stock even at a valuation of more than 24 times EV/Ebitda, a premium to Amazon and Alibaba and the very maximum that bankers had pitched when trying to win the mandate.
Securing such a lofty valuation was particularly impressive as Allegro has a market of only 38 million Poles, versus the billion-plus of its US and Chinese peers, and convinced investors that it could not only continue its growth trajectory but also fend off Amazon.
“We had to show Allegro was well positioned to fight off the competition,” said Natasha Sanders, head of emerging market ECM at Morgan Stanley. “From the first interaction with investors all of that was covered. We were not reactionary; we anticipated those concerns.”
Much of the success came from generating momentum by exploiting the benefits of a virtual process and attracting anchor orders.
A deep-dive meeting had 83 investors involved, rather than a more typical 20. There were also more rounds of meetings, with investors having three opportunities to meet management.
Three anchor investors agreed to buy 35% of the offering at launch and their comfort in paying the top of the range saw other investors abandon their maximum valuations. “[Their limits] just went out the window, more so than on any deal I’ve ever seen before,” said Nick Fowler, co-head of equity capital markets for EMEA at Lazard.
At the final count there was a 98% hit rate from one-on-one meetings.
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