Sonae MC’s IPO fails over market tension

  • ECO News
  • 12 October 2018

Sonae decided to cancel its public offer, justifying the decision with the ongoing tension in the markets.

Sone’s IPO, which had started this week, has failed. Exactly a week after the prospects had been approved by CMVM (markets regulator), the owner of retail business Continente is now stepping backwards in the dispersion of its capital, justifying this decision with the present tension witnessed in the international markets.

“Sonae SGPS S.A. hereby informs that, due to current adverse conditions in international markets, the institutional offering will not take place, which hence determines that the initial public offering of Sonae MC Shares will not be executed”, the official announcement from the company to the market stated.

Sonae’s IPO kicked off this Monday, with the company putting 21% of its shares for sale. The bigger slice was going to institutional investors and in the event that they wouldn’t invest in the company, Sonae had already noted the whole operation would be invalidated.

And that’s what ended up happening; the market conditions were adverse and the institutional investors haven’t bought the amount expected by Sonae.

The company has kicked off with the IPO in a week that was marked by high tensions in international markets.

For example, the tension between Rome and Brussels, over the state budget, as well as the escalation of USA’s debt interest rates, all have contributed for stock markets to lose value rapidly, taking market indexes to minimum levels.

The IPO did not manage to attract institutional investors, and as such, it has failed. The small investors who had decided to buy Sonae’s stocks over the last few days will not be able to buy the company’s titles valued at 1.40 and 1.65 euros. These acquisition orders can be revoked by the investors, but even if they aren’t, they will eventually be invalidated anyway.