On the eve of the listing of South African telecommunications utility Telkom on the Johannesburg and New York Stock Exchanges, the government has cut the price range for the Telkom initial public offering (IPO) to between R27 and R30 a share.
A representative for the joint global coordinators said this implies an equity valuation range of between R15-billion to R16,7-billion or in terms of the ADR $13,30 to $14,80.
The size of transaction is the same as anticipated — 25%, the representative said. The previous range was from R33,50 to R40,90 per share. The representative said that the market reaction so far had been “extremely positive”, but that throughout the book building exercise markets had been extremely volatile due to the situation surrounding the possible war against Iraq.
“The government has taken an informed decision on the basis of current market conditions,” the representative said.
“If we look at the institutional feedback they are comfortable to reduce the price range to create the right basis for the transaction.”
The revised range represents the price range where South African and international investors have expressed significant interest in the transaction. The book demand is more than fully subscribed within the new price range on indications given by institutional investors — both local and international, the representative added.
The book will closes at 1700 UK time — 1900 South African time — on Monday.
The pricing and allocation will be announced on Tuesday morning when conditional trading begins. – I-Net-Bridge