Re-opening: block sellers tipped for ECM return after mega Heineken deal

Dealspeak ECM Pulse 20 February

Re-opening: block sellers tipped for ECM return after mega Heineken deal

By , Cristiano Dalla Bona, and Rachel Lewis

llfunds, Teamviewer, Italian ABBs among names in the pipeline
Window might shut quickly with March Fed meeting
Heineken’s books show “who’s who” in investment community

A huge EUR 3.2bn block trade in Heineken [AMS:HEIA] last week by FEMSA might re-awaken Europe’s dormant blocks market with sellers, particularly sponsors, being urged to grab a window before it closes.

The Heineken deal was shaped as double block in two listed entities with a EUR 1.9bn sale in Heineken NV and a EUR 1.39bn sale in Heineken Holding NV [AMS:HEIO]; the issuer also sold a EUR 500m exchangeable bond in the holding company.

Mexican conglomerate FEMSA sold a 3.62% stake in Heineken NV and a 6% slice of the holding company at discounts of 3.45% and 3.6%, respectively.

Under this news service’s Price of Liquidity model, the deals had a liquidity cost of 0.95x for the NV share sale and around 0.6x for the Holding block trade, a tight print compared with trades in January, as well as throughout most of 2022.

Secondary follow-on activity has seen its slowest start of the year since 2019, according to Dealogic data, with only 17 deals priced year-to-date in Europe.

As investors approach the end of FY22 results season, Heineken shows others can grab the opportunity to trade ahead of the next corporate blackout in about a month.

Those mulling a deal will have to watch out for potential red flags in March, bankers warn, as the release of US inflation data and the next meeting of the US Fed on March 21-22 could sour moods. Recent disappointment in US inflation data means a 25bps rate rise should not be a foregone conclusion, one banker noted.

Sponsors expected to return

A sell-down in Heineken by FEMSA could be the first of several “mega blocks” this year, alongside possible sales in Haleon, EQT, Deutsche Telekom, LSEG and NatWest, as reported by this column.

Alongside mega blocks, bankers also point to a resumption in sponsor sell-downs. An Allfunds’[AMS:ALLFG] block by IPO sellers Hellman & Friedman, Singapore’s GIC and BNP Paribas could be among the contenders.

The sellers previously sold down in November in a EUR 288m deal. Four ECM bankers speaking to ECM Pulse confirmed they expected an Allfunds block soon. The lock-up on the deal expires February 22, and the share price is up over 8% since the last sale.

Another asset that could come to market is TeamViewer [ETR:TMV], last sold by sponsor Permira in February 2021.

The company’s share price is well below the last sale price of EUR 42.25 but the stock has risen by over 100% since September. A source said Permira is likely to want to exit the asset but added that the sponsor saw any exit as a long-term project.

An ECM banker and an ECM investor both said they expect Teamviewer blocks to restart as Permira looks at asset disposals to raise new funds.

A spokesperson for Permira declined to comment for this piece. H&F declined to comment, while BNP Paribas did not respond to requests for comment.

In addition to these deals, two Italian ECM bankers added that there is market chatter about sell-downs in Industrie De Nora [BIT:DNR], Intercos [BIT:ICOS] and Technoprobe [BIT:TPRO] by IPO sellers.

A spokesperson for GIC, an IPO seller in Intercos, declined to comment on a potential block in the Italian firm or an Allfunds sale. IPO sellers in De Nora and Technoprobe did not respond to requests for comment.

Premier deal

Two sources close to the Heineken trade compared the deal with the IPO of Porsche [ETR:P911] in that it was an ECM transaction in a premier, liquid stock, rarely seen in equity capital markets.

“It is a banner name,” said one, adding that the deal had been largely expected by the market.

In an unusual move for such a large deal, the transaction was conducted without a wall-cross, both sources confirmed, with bookrunners confident that reverse interest and a EUR 1bn buyback from Heineken, EUR 708m in its own shares and EUR 292m in the holding company, would be enough to see the deal over the line.

The second source described the book as a “who’s who” of the global investment community with sovereign wealth funds, tier-one institutional investors and hedge funds all taking part in the trade.

In addition to the corporate buyback, both sources added that the deal benefitted from a large non-institutional anchor that took over EUR 600m of the deal.

Both stocks have traded up since pricing last Thursday with Heineken NV up 5.12% from the offer price and Heineken Holding up 4.4%.

One of the sources added the buyback, anchor and sheer quantum of demand meant there was still scarcity in allocations with hedge funds wanting more.

Not every seller has a Heineken in their portfolio, but markets are clearly open. The question will be, for how long?

Spokespeople for Heineken and FEMSA did not respond to requests for comment.