Cornerstone
Emerging market payments company Network International delivered on every count at its IPO with a differentiated equity story offering strong growth, a wealth of interest that translated into a bulging book of demand and even a pop in the aftermarket.
The all-secondary £1.2bn London listing that saw Emirates NBD Bank selling with Warburg Pincus and General Atlantic also stands out for its ambitious 60% upsize and value-enhancing cornerstone investment.
Network International was only the fourth EMEA IPO to launch in the year when it kicked off in March. Far from being a safe, run-of-the-mill company to bring to a quiet market, its business spans more than 50 countries in the Middle East and Africa but the best outcome relied on selling to more than emerging markets investors.
Securing a strategic partnership and £217m cornerstone investment from credit card giant Mastercard during pre-marketing was crucial.
Independent adviser Evercore estimated that the investment added US$500m to Network International’s market capitalisation.
“When you are doing an IPO out of North Africa and the Middle East, to switch it from emerging market funds to general funds takes some effort,” said Jim Renwick who leads Evercore’s ECM practice in EMEA. “We converted nearly all the top 40 investors and I think it was largely a result of that endorsement.”
Books were covered within two hours and the deal was covered at the top of the range on the same day. A week later, with books more than 10 times covered, the base deal size was upsized by 60% and a day was shaved off bookbuilding.
The final book had US$13bn of demand, with US interest particularly strong. The frothy number ultimately means little, but approximately 90% conversion from 52 one-on-one meetings during roadshows shows very high conviction.
Final pricing came at 435p per share, just above the mid-point of the initial range and a premium to the main peer Worldpay. Network International shares closed their first day up 20% and touched highs of 630p on August 2, up 45% from IPO pricing. As of mid-November they were still 19% above water.
Citigroup was sponsor, and global coordinator on Network International’s listing with Emirates NBD Capital, JP Morgan and Morgan Stanley. Barclays and Goldman Sachs were bookrunners, with Liberum as co-lead manager.
The positive aftermarket ensured major shareholders could cash in a further €884m through two subsequent sell-downs, the first of which involved waiving the IPO lock-up more than 40 days early.
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