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@ visit http://www.ifre.comDriverless car maker
finds route to IPO
Equities Priced below guidance, Navya trades upBY ROBERT VENES4HEûLASTûMAJORû%UROPEANû)0/û
before the summer holidays
FAILEDûTOûATTRACTûSUFlCIENTû
demand to cover the deal, but
autonomous vehicle maker
NAVYA managed to rescue the
mOATûONCEûITûSLASHEDûTHEûSIZEûOFû
the fundraising and valuation of
the company.
4HEûENDûRESULTûWASûAûõMû)0/û- 25% less than the minimum target
- yet the company secured the cash
it needs to sustain it for the next 12
MONTHS ûWHILEûTHEûlNALûPRICEûOFûõû
per share was vindicated by a
positive aftermarket, even without
a greenshoe.
Ultimately the deal’s small
size meant that whatever the
outcome it wouldn’t have any
BEARINGûONû)0/SûWHENûTHEû
market reopens in September.
Nonetheless Navya shows once
again that investors are not put
off when they disagree with
proposed valuations and are
keen to engage with sellers.
Shares in the French electric
vehicle company closed at €7.
on Tuesday when the stock
DEBUTEDûONû%URONEXTû0ARISû4HATû
2.1% gain underplays the success of
THEûlRSTûDAYûOFûTRADINGûWHEREûTHEû
opening price was €7.90 and the
FULL
DAYû67!0ûWASûõû4HEû
shares moved up to €7.30 on
Friday morning. Volume was
extremely light all week with
VOLUMEûONûEVENûTHEûlRSTûDAYû
representing little more than 1% of
the shares placed with investors.
Originally, Navya had targeted
€50m in primary proceeds, with
an increase option up to €57.5m.
Navya needed the cash. The
company said at the start of
bookbuilding it had a cash
position of €6m, allowing it to
carry out planned activities only
so far as the end of August 2018.
Navya estimated that it requires
€31m to continue operations for
another 12 months.
Joint bookrunners Credit Suisse
and Natixis, the latter in
cooperation with ODDO BHF, were
unable to achieve that target
within an initial bookbuilding
period of six days and so books
were held open an extra two days
until last Monday, but with no
changes in deal structure.
The rub is that bookbuilding
had been accelerated from the
typical two weeks as investors had
already seen the management
and a reasonably speedy covered
message was anticipated.A revision of the structure
came on Monday morning, just
a couple of hours before the
BOOKSûWEREûDUEûTOûCLOSEû0RICINGû
inevitably came at the bottom of
revised guidance of €7-€9 versus
the original €9-€12 price range.
The restructured deal added
the option to cut the deal by 25%
while existing shareholders 360
#APITALû0ARTNERS û+EOLIS û6ALEOû
and Graviatino upped their
aggregate order to €11.8m, up
from €8.575m previously.
!ûBANKERûONûTHEûmOATûSAIDûTHATû
the book was made up of a
combination of North American
and French investors, with support
from UK, Swiss and German
money. The size of the deal and the
sector involved meant interest was
largely from technology specialists.
The banker acknowledged it was
not a long list of investors
participating, referring to it as
hSOMEWHEREûBETWEENûANû)0/ûANDûAû
private placement”. Retail took 4%
of the shares.
Last minute restructurings
have been unusually common
this year, but have provided
mixed results for investors. Two
are currently more than 15%
ABOVEûTHEûREVISEDû)0/ûPRICE ûBUTû
four are more than 15% down,with Saferoad steady at up 1.7%. (^)
March, when they pulled their
Tier 2 deal,” said Tom
+INMONTH ûAûlXEDûINCOMEû
STRATEGISTûATû!".û!-2/ûh7Eû
cannot see a Tier 2 as possible
without a new plan being
CONlRMEDv
“Capital raises will be
exceptionally tough, especially
without a new plan, and it
leaves the door open for a
merger as a potential scenario
in the ongoing talks.”
OTHER OPTIONS
Still, the bank has some options
to get its capital ratio up to the
ûREQUIREDûBYûTHEû%#"ûITû
stood at 12.23% at the end of the
lRSTûQUARTER û)TûHOPESûTOûDISPOSEû
of assets, including a bad loan
platform and merchant banking
book.
Much will depend on market
conditions, however. The bank
cannot afford to accept low
bids that might eat through
CAPITALû!ND ûAFTERûlVEû
consecutive years of losses
totalling €3.1bn, it is unlikely to
be able to earn its way to better
capital ratios.
"ADûLOANûSALESûMIGHTûBEûONEûWAYû
out: a quarter of the bank’s
outstanding loans are in arrears. It
has sold off two portfolios totalling
€2bn of face value in the past year,
but any new transactions could
actually make capital ratios worse
if the bid is too low.
Another problem the bank
faces is politics. The chairman,
his deputy and two board
members have resigned in
recent weeks, while local
businessman Vittorio
-ALACALZAûnûWHOûOWNSûAûlFTHû
of the bank – has called for
the dismissal of the entire
board.
h4HEûmEEINGûOFûTHEûCHAIRMANû
and board members in quick
succession show the struggles
that the lender will have,” said
Kinmonth. “It is not a good sign
to convince investors, both
domestic and abroad, to place
faith in the company.” (^)
“If there is a deal it will be
extremely cheap – double digit
pricing. We wouldn’t get any
ancillary business so why would
we lend so cheaply?” a third
banker said.
The acquisition of the Sabic
stake could also impact the
TIMINGûOFû!RAMCOSûPLANNEDû)0/ û
the state oil giant’s chief
executive, Amin Nasser, said
earlier this month and could even
REMOVEûTHEûNEEDûTOûDOûTHEû)0/
0)&ûCOULDûRECEIVEûUPûTOû53BNû
from the Sabic sale, which would
GIVEûSUFlCIENTûFUNDSûTOûEMBARKûONû
ambitious infrastructure and
development projects planned for
the Kingdom.
SABIC REFINANCING
3ABIC ûWHICHûISûRATEDû!!
! û
said in May that it expected to
RElNANCEûNEARLYû53BNûOFû
external debt by October. A
potential change of ownership
is unlikely to alter these plans,
bankers said.
The company has a US$1bn
bond which is due to mature on
October 3 and has hired banks
for an international bond
offering. The timing and terms
of the issue have yet to be
decided.
Sabic also had a US$1bn term
loan that matured on July 18, and
expects to use drawings on its
existing US$2bn revolving credit
facility to repay that loan until the
53BNûRElNANCINGûISûCOMPLETEDû
Discussions are currently
underway, bankers said.
“We are discussing various
things with Sabic, something
may come. It has not been really
agreed what purpose the money
will be used for,” a fourth
banker said.
The term loan was originally
agreed in 2013 via a club
syndicate and paid 50bp over
,IBORû4HEûlVE
YEARûREVOLVINGû
credit was put in place in
December 2015 and pays 25bp
over Libor. (^)
“This is being led from
the top by the crown
prince, I don’t think
people at the Aramco
level even know what
is going on”
Last minute
restructurings have
been unusually
common this year, but
have provided mixed
results for investors