Dawning

28 January 2015 By Quentin Webb

Sunrise aims to raise about $2 bln in an upcoming flotation. As No. 2 in a rich market with a benign regulator, the stock offers yield, growth, stability and a decent discount to market leader Swisscom. Just one cloud looms: the outside risk tycoon Xavier Niel causes trouble.

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Sunrise laid out the price range for an initial public offering that could value it at up to 3.3 billion Swiss francs ($3.7 billion). On Jan. 27 the company said it planned to raise 1.35 billion francs to cut net debt to about 2.7 times EBITDA. CVC, the buyout firm that has owned Sunrise since 2010, will also sell at least 250 million francs of shares, and a “greenshoe” option could increase the deal size by 15 percent.

Sunrise is Switzerland’s second-largest telecom operator behind Swisscom, the $31 billion state-backed operator. It boasts a market share of 27 percent in mobile and 9 percent in fixed broadband. It made EBITDA of 621 million francs in the 12 months to Sept. 30, 2014, on revenue of 2 billion francs.

In December Xavier Niel, the French tycoon behind Iliad, agreed to buy rival Orange Switzerland for 2.8 billion francs from Apax, another private equity firm. The purchase was via his private NJJ Capital vehicle, not through the Paris-listed Iliad.

Sunrise outlined its intention to float on Jan. 14, a day before the Swiss National Bank abandoned the franc’s peg to the euro and sent the currency soaring. However, Sunrise said it spends more in foreign currencies than it earned, so the effect was “rather neutral to positive” and the SNB move would have “no impact” on its IPO.

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