LONDON (Reuters) – Private equity-backed airline ticketing firm Travelport called off its $1.78 billion London listing on Wednesday, citing poor market conditions, the latest in a slew of failed IPOs across Europe.
The decision to postpone what would be the biggest initial public offering (IPO) in London in two years followed scrapped deals of Belgium chemical firm Taminco, UK bank Walton & Co. and Germany’s Hochtief Concessions.
The failure is a setback for to major owner Blackstone (BX.N), the private equity house with up to six other IPOs in the pipeline, including Merlin Entertainment, owner of Legoland and the London Eye.
Travelport Chief Executive Jeff Clarke blamed increasingly uncertain and unstable market conditions for the decision.
“Since we announced our intention to float, there has been significantly increased volatility and uncertainty in the global equity markets, as a result of macro circumstances unrelated to our business,” Clarke said in a statement.
Travelport bookrunners had tried to rescue the deal, slashing the price range by a quarter to between 180 pence to 190 pence per share from a previous range of 210p-290p.
The sale, arranged by Barclays Capital (BARC.L), Credit Suisse (CSGN.VX), Citi (C.N), Deutsche Bank (DBKGn.DE) and UBS (UBSN.VX), was due to close on Thursday.
COMPENSATION CUTS INADEQUATE
Travelport had also tweaked its remuneration policy to cut the amount directors and staff would receive if operating profit growth reaches the company’s targets.
But investors targeted to participate in the listing said the bonus package change had not gone far enough and failed to ease more fundamental reservations about the company.
“This one-page addendum that we received yesterday only makes the whole thing worse. The more you look into it the more generous the scheme seems,” said one UK fund manager.
Travelport’s earnings before interest, taxes, depreciation and amortization, or EBITDA, is estimated to reach $631 million in 2009 and between $630 million and $660 million in 2010, according to analysts.
Some fund managers said they weren’t interested in the offering due to the poor performance of recent IPO stocks.
“Some of the recent IPOs have been of very poor quality, Rusal (0486.HK), Taminco. This normally happens at the end of the issuance cycle, not at the start,” said a fund manager.
UK asset manager Gartmore (GRTR.L) has fallen 16 percent since its $553 million listing in December, while Taminco was scrapped and UC Rusal shares have dived 19 percent since a $2.2 billion dual listing in Hong Kong and Paris last month.
Travelport’s IPO was rated “avoid” by London-based Independent International Investment Research.
“We do not expect significant return from the offering over our six to 24 month investment horizon,” IIIR analysts said in a note, valuing Travelport shares at 266 pence.
Blackstone and Technology Crossover Ventures (TCV) bought Travelport for $4.3 billion from conglomerate Cendant in 2006.
Blackstone, whose 70 percent stake would have fallen to around 40 percent after the flotation, put in $775 million in equity and has already extracted a healthy return, collecting most of a $1 billion special dividend in 2007.
The private equity group would also h ave received $49 million in advisory fees from the IPO.
(Editing by David Gregorio)