TT shines on debut day
The Postal Savings Bank (TT) got a warm reception in its debut on the Athens Stock Exchange yesterday, gaining almost 12 percent and boding well for other state asset sales. Shares in Postal Savings, which went public in May, raising 611 million euros ($790 million) for the government, outperformed the broader market, which lost 1.98 percent, tracking weakness in Europe. TT shares, which had an IPO price of 12.50 euros, settled 11.84 percent higher at 13.98 euros after active trading, with more than 5.6 million shares changing hands. TT’s listing is a test case for other state divestments, including ports and airports, that could be floated by next year, as part of the center-right government’s restructuring efforts. Analysts said TT’s debut showed that bourse flotations were a good way to privatize state firms, provided they were attractive to investors. «Investors who didn’t get enough shares from the IPO came out on the buy side,» said an analyst who did not want to be named. «TT has an underleveraged balance sheet, which makes it a likely acquisition target.» Greece sold 34.84 percent of TT in late May in an offering that was heavily oversubscribed. The rest remains in state hands. So far the government has raised 328 million euros from the sale of 7.2 percent in state-controlled ATEbank in early May and another 400 million via a capital return from TT prior to the initial public offering. Restructuring efforts With TT’s IPO proceeds, state coffers got a cash injection of 1.34 billion euros, meaning this year’s goal of 1.65 billion euros from privatizations is 81 percent covered already. Greece is selling state assets as part of efforts to restructure its economy, where the state has a heavy hand, and to pay down its debt mountain, one of the highest in the eurozone as a percentage of gross domestic product (GDP). «The government is very close to meeting its full-year privatizations revenue target,» said economist Platon Monokroussos at EFG Eurobank. «The flotation of public companies has proved a successful recipe in this aim.» The government plans to float more assets, including Athens International Airport, to lighten the burden of debt servicing on the budget and lower the fiscal gap to below the EU’s 3 percent of GDP ceiling in order to avoid sanctions. TT’s closing price gives it a market capitalization of 1.97 billion euros, more than half that of Emporiki Bank, Greece’s fourth-largest lender by assets. The government wants to sell up to 24 percent of Emporiki later this year. The shares will trade with no daily volatility limit for the next two sessions. «The low loans-to-deposits ratio of 30.5 percent and the good loan quality of Postal Savings Bank make it an interesting acquisition target for banks seeking liquidity and low funding costs,» said Egnatia Finance. At its IPO price of 12.50 euros, TT went public at 17 times the bank’s 2005 earnings or two times its book value, at a premium to Greek banks, which trade at 15.2 times 2006 earnings, according to Reuters Estimates.
