(Bloomberg) -- Investors led by private equity fund CVC Capital Partners Plc seek to raise as much as 6.45 billion zloty ($1.67 billion) in an initial public offering of Poland’s Zabka Group SA, Europe’s largest chain of convenience stores.
In what may be the biggest Warsaw listing in four years, shareholders in the 7-Eleven-styled chain are offering 300 million shares, or a 30% stake, according to the prospectus published on Tuesday. The price range is set at 20 zloty to 21.5 zloty per share, which gives the company an implied market value of as much as 21.5 billion zloty.
The offering comes as Europe’s equity capital market prepares for one of the year’s busiest periods as companies rush to finalize their listings ahead of next month’s US presidential election. Zabka may be the continent’s fourth biggest IPO of 2024, data compiled by Bloomberg show.
“Zabka seems to be a well-managed growth company with ambitious plans,” Jaroslaw Niedzielewski, head of investment at Investors TFI mutual fund in Warsaw, said by email. “Given its size and possible inclusion in equity benchmarks, it’s likely to be a ‘must have’ for a number of funds.”
The retailer itself won’t sell new shares in the IPO. The book-building process will end on Oct. 9 and Zabka expects to start trading on the Warsaw Stock Exchange around Oct. 17. The over-allotment option allows to increase number of offered shares to 345 million.
Zabka is set to be the east European nation’s largest IPO since e-commerce marketplace Allegro.eu SA’s record $2.8 billion offering in 2020, topping the $1.1 billion raised by discount retailer Pepco Group NV in 2021. Since then, Warsaw offerings have since dried up due to war in neighboring Ukraine, which was accompanied by a sentiment-zapping energy crisis.
CVC units hold about 77% in Zabka, which it bought from Mid Europa Partners in 2017, helping the retailer to widen its reach to more than 10,000 stores, including its recent expansion in Romania. Partners Group Holding AG that is also selling shares has about 18% stake. Zabka managers and the European Bank of Reconstruction and Development also hold minority stakes.
READ: CVC’s Winning Bet on Polish 7-Eleven-Styled Chain Spurs IPO Plan
Zabka targets like-for-like sales growth of 7.5% to 9% in 2024 and plans to double revenues by 2028. In the first half of 2024, sales grew 10.3%, outpacing supermarket peers Dino Polska SA and Jeronimo Martins SGPS SA’s Biedronka. It also targets its profit margin at 12%-13% and plans to retain earnings to fund growth of its business instead of paying dividends.
Goldman Sachs Group Inc. and JPMorgan Chase & Co. are global coordinators of the share sale, according to the prospectus. Banco Santander SA, Bank Pekao SA, BNP Paribas SA, CVC Capital Markets S.à r.l., Morgan Stanley & Co. International plc, PKO Bank Polski SA, ING Bank NV, MBank SA and Trigon Dom Maklerski SA are also working on the transaction.
--With assistance from Piotr Bujnicki.
(Updates with transaction details, company’s outlook and fund manager comment)
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