Medica Cuts IPO Price, Covers Float

LONDON/PARIS (Reuters) – French care home group Medica’s 275 million euros ($375.7 million) initial public offering was finally covered after it offered investors a 19 percent price cut, sources close to the deal said.

Citing the recent deterioration in market conditions, Medica announced before the share market opened on Monday that it would price the IPO at 13 euros per share, below a 16.00-19.50 euros indicated range, and a 24 percent discount to bigger domestic rival Orpea (ORP.PA).

Sentiment towards IPOs has cooled in the past two weeks, with Belgian chemical company Taminco forced to postpone its 400 million euro flotation plan, as investors rejected its valuation, while UK junior board listing candidate Walton & Co. cancelled a 200 million pound ($311.6 million) flotation after it failed to attract investor interest.

REVISED TERMS

Medica’s IPO size remained unchanged, but under the revised terms, private equity owner BC Partners scrapped a plan to sell 15 million euros worth of existing shares via the IPO. It will offload shares only if an over-allotment option is exercised.

The over-allotment option was down-sized to 6.5 percent of the offering from 15 percent previously. Predica, a unit of Credit Agricole (CAGR.PA) and which holds 31 percent in care-home peer Korian (KORI.PA), on Monday reaffirmed it would invest 40 million euros in the IPO, representing 15 percent of the offering. At 13 euros each, Medica would sell its shares at 10.2 times enterprise value to earnings before interest, tax, depreciation and amortisation (EV/EBITDA), a 24 percent discount to market leader Orpea.

While the valuation is at a 10 percent premium to domestic rival Korian, many fund managers consider Medica a bigger player than Korian.

Bookrunners Credit Suisse (CSGN.VX), Royal Bank of Scotland (RBS.L) and BNP Paribas (BNPP.PA) are closing the deal on Monday at 1600 GMT. ($1=.7320 Euro) ($1=.6418 Pound) (Editing by Simon Jessop)