La Caixa goes ahead with Spain's largest IPO as Rusal shelves float

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The Independent Online

La Caixa, the Spanish savings bank, brushed off market concerns by pushing ahead with the country's largest ever stock market float. On the same day that it emerged that UC Rusal, the Russian aluminium giant, had postponed its $7.5bn (£3.7bn) offering due to poor market conditions, the Barcelona-based giant laid out the timeline for the €5bn (£3.5bn) float of its industrial portfolio.

The listing will be keenly watched by bankers who have had to pull several big deals this year amid wildly fluctuating markets. Called Criteria Caixa, the portfolio includes major holdings in several of Spain's blue- chip companies, including O2-owner Telefonica, the energy group Gas Natural, and Abertis, the infrastructure giant. According to Dealogic, the listing would be the largest ever in the country, beating the €3.3bn that was raised in 2000 when Telefonica floated a stake in its mobile business.

In the prospectus, the company set the price range for the shares at between €5 and €6.75. If a greenshoe option is taken up by investors, Criteria will sell a 22 per cent stake. At the upper end of the share range the offering would value the company at €22bn, making it one of the top 10 largest companies in Spain. Shares are scheduled to begin trading on 10 October.

La Caixa has said it will use the proceeds to fund a buying spree abroad after having devoted all of its resources until now on growing its retail banking business within the fiercely competitive Spanish market. With more than 5,000 branches, it operates Spain's largest retail branch. Criteria will focus its acquisitions activity on Asia, eastern Europe and North America. Last week, it unveiled the first such deal when it paid $265m on a 4 per cent stake in Bank of East Asia in Hong Kong.

The determination to push ahead with the listing despite tough market conditions has raised eyebrows among some bankers. Amid worries about the slowing property market, falling house prices, and the global credit crunch, Spain's benchmark Ibex index has fluctuated wildly this year. Since June, the index has shed 6.7 per cent. La Caixa admitted in its prospectus that the value of quoted companies in its portfolio – which account for nearly 90 per cent of its assets – had fallen by 8.8 per cent in the past two and a half months alone.

A string of similar listings are expected to follow from smaller rivals to La Caixa. Savings bank Bancaja has unveiled a plan to list a stake in its €4.5bn industrial portfolio, and Caja Navarra said it will float a stake in its portfolio as well.

The widening pipeline of Spanish offerings stands in stark contrast to the decision taken by UC Rusal. The world's largest aluminium producer decided at a board meeting on 19 September to pull its plans for what would have been Europe's largest offering this year. Morgan Stanley, Deutsche and JP Morgan Cazenove were the banks assigned to handle the deal. It is understood that the company will wait until the new year to re-examine the float.

Last month, Cunico Resources, the mining group chaired by former Threadneedle Asset Management chairman Paul Manduca, pulled a planned $2.5bn listing in London, also citing poor market conditions. Rusal's withdrawal will be particularly painful for Deutsche Bank, which was the lead bank on Cunico's aborted offering.

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