Irmãos Martins estão de saída da Martifer

[Alfred E. Neuman]

Cintra breaks ground in IPO market
Public works offering seen as Spain's biggest in years

By Barbara Kollmeyer, CBS MarketWatch
Last Update: 12:01 AM ET Oct. 26, 2004


MADRID (CBS.MW) - It lacks the glitz of Google, but Spanish public works company Cintra could produce one of the biggest initial public offerings that country has seen in years in a debut slated for Wednesday.

Cintra is selling 38 percent of its share capital in an effort to raise between 1.53 billion euros and 1.64 billion euros ($1.96 billion to 2 billion), according to media reports.

A deal of such magnitude would be worth slightly more than the $1.7 billion Google (GOOG: news, chart, profile) raised in August, and almost twice the size of all Spanish IPOs this year. Still, the Cintra offering would rank well below the $4.4 billion raised by Belgian telecom group Belgacom (BE:000381027: news, chart, profile) in March.

Cintra reportedly has set a price range of 8.24 euros to 8.8 euros a share, which values the company at around 4.2 billion euros. The group's parent company is Spanish construction group Ferrovial SA, which will retain majority ownership.

The toll-road and car-park concession firm recently entered the U.S. market through a joint-venture to lease and operate a Chicago toll road -- the 7.8 mile Chicago Skyway -- with Australia's Macquarie Infrastructure Group for 99 years.

Cintra already has a North American presence, chiefly in Canada, where it operates an express toll route in Toronto. With the Chicago deal, Cintra will operate 17 toll roads in Spain, Portugal, Ireland, Chile, the U.S. and Canada.

"Contrary to other highway concession companies where they go public, Cintra has a fuller portfolio, and they've been operating for 10 to 15 years," said Javier Hombria, an analyst with Dexia Equities Espana in Madrid.


Spanish IPOs in the arena


Data from global investment banking research group Dealogic, shows Spain ranked fourth among European IPO markets this year. Deals total about $1.1 billion, including Banco Sabadell, real estate group Fadesa, and television group Gestevision Telecinco (GSTVFM: news, chart, profile). Shares of all three companies are trading higher than their IPO prices.

"Obviously, the market is not the market of 2000, but I think it will come back," said Antonio Zoido, chairman and chief executive of BME, Spanish Exchanges.

A decade ago, Spanish IPOs were routinely large affairs, involving state-owned utilities and banks. And in 1999, Spanish Internet provider Terra Networks (TRLY: news, chart, profile) was one of the hottest IPOs of the year.

Investors in Spain saw three IPOs in both 2002 and 2003, and four in 2001.

Retailer Inditex (ES:014839601: news, chart, profile) probably had poor timing for its IPO in April 2001, but investors who took a leap of faith were rewarded. Shares of Inditex, which owns the highly successful Zara fashion chain, are trading at nearly 20 euros -- almost 20 times its IPO price.

Pharmaceutical group Zeltia (ES:018494081: news, chart, profile), which debuted back in March 2003, hasn't budged far off its original listing price of around 5 euros.

Domingo J. Garcia Coto, vice-director of the Research Department for the Bolsa de Madrid, said five or six companies have expressed interest in going public, but many are waiting for the market to show signs of a recovery.

Spanish healthcare group Probitas Pharma earlier this year canceled its IPO in favor of waiting for a stronger market. Meanwhile, information technology firm Telvent (TLVT: news, chart, profile), which listed on the Nasdaq, was forced to cut its offering price and experienced a fairly flat debut.

One potential IPO to watch is telecom group Auna, said Dexia's Hombria. The company has been trying to build momentum by making results public, he said, even though that isn't required of an unlisted company.

"They're testing the waters to go public in 2005," Hombria said. "They're not sure yet if the market is ready for another Spanish telecom company. That will be the major IPO next year."