Legrand IPO 30x oversubscribed

The flotation of the private equity-backed French electrical equipment maker forced a temporary suspension of the Euronext Paris market today amid frenzied demand for shares.

Legrand, which was acquired through a de-listing by Paris-based private equity firm Wendel Investissement and US LBO giant Kohlberg Kravis Roberts in 2002, today sold 20 percent of its shares to a ravenous public as it listed on Euronext Paris.

The shares began trading at €19.75 each, at the very top of yesterday’s announced price range of between €17 and €19.75. Despite this, the offering was oversubscribed by a factor of 30. The IPO valued the company at €5.4 billion ($6.6 billion) and raised €1.14 billion.

Volatility arising from the scramble to snap up shares at one point resulted in the temporary suspension of the Euronext market. Sources close to the listing said the level of demand had been bettered in France only by last year’s privatisations of EDF and Gaz de France. By midday, the shares had risen 19.7 percent from their launch price to €23.64.

Reasons for the IPO’s success included the strong current performance of the Paris bourse, together with Legrand’s excellent recent results and bullish future growth forecasts from analysts. Last year, the firm more than tripled its net profits to €101.4 million and saw sales increase 11 percent to €3.2 billion.

Following the IPO, Wendel and KKR retain a combined 60 percent stake in Legrand, while the general public now holds 20 percent. Minority shareholders including WestLB, Montagu Private Equity and Goldman Sachs Capital Partners own around 15 percent, and Legrand management around four percent.

Said Jean-Bernard Lafonta, chairman of Wendel’s management board: “This is an important step in the development of Legrand, which now represents around 25 percent of our group. We intend to remain committed shareholders in the company and are keen to pursue with our partner its growth and development strategy alongside management.”

Wendel, which makes individual investments of more than €100 million in European industrial and service companies, is also listed on Euronext Paris.

Wendel and KKR acquired Legrand in late 2002 in unusual (and, with hindsight, fortunate) circumstances. Parent company Schneider Electric had begun the process of acquiring Legrand the previous year, but was forced to divest it when European Union regulators blocked the deal on competition grounds.

Based in Limoges, Legrand makes products and systems for electrical installations and information networks and has offices and subsidiaries in more than 60 countries.