Sunrise raises SFr1.36bn from IPO

The initial public offering of shares in Sunrise has generated a total of SFr1.99bn (US$2.15bn), enabling the Swiss mobile operator to raise SFr1.36bn (US$1.47bn).
The remaining amount will go to private equity-owner CVC Capital Markets, which has…

The initial public offering of shares in Sunrise has generated a total of SFr1.99bn (US$2.15bn), enabling the Swiss mobile operator to raise SFr1.36bn (US$1.47bn).

The remaining amount will go to private equity-owner CVC Capital Markets, which has retained a sizeable minority stake in the telco.

The shares priced at SFr68 apiece in the middle of Sunrise’s expected SFr58-78 range, giving the company an implied market capitalisation of SFr3.06bn (US$3.31bn).

Sunrise will use the proceeds to deleverage its balance sheet and reduce the cost of its debt, allowing it to exploit future growth opportunities, the company said.

Following completion of the IPO, 65% of Sunrise shares will be in free float on the SIX Swiss Exchange. This could rise to 75% should the syndicate of banks choose to take up the greenshoe in full.

The over-allotment option would see a further 4.1 million of existing shares held by CVC sold. Deutsche Bank and UBS, joint global coordinators and joint bookrunners on the IPO, have until 8 March to exercise the greenshoe.

The PE firm planned to surrender an initial 4.3 million shares, but sold an extra 5 million, which Sunrise said was “to meet strong demand from a broad range of institutions”.

CVC and the board of directors now have a six month lock-up period before the firm can sell more shares, and 12 months for the company, although this is subject to customary exceptions.

It has been speculated that Sunrise and competitor Orange Switzerland, which was recently sold to telecoms magnate Xavier Niel, could seek to merge again.

A previous attempt to combine the operators was rejected by the local antitrust authority in 2010. Following that decision, CVC bought Sunrise from Danish telco TDC later that year for US$3.2bn.

Speaking to TelecomFinance in November, Swisscom’s CFO Mario Rossi said there was a good business case for an Orange-Sunrise merger and the sector regulator would be in favour, but that the competition regulator was less predictable.

Morgan Stanley and Berenberg acted as additional joint bookrunners on the IPO, and Bank Vontobel was co-lead manager. Lilja & Co served as independent adviser to CVC and Sunrise.

Sunrise is the second-largest telecoms operator in Switzerland after Swisscom. For the 12 months ending 30 September 2014, it declared revenues of SFr2bn and EBITDA of SFr621m.