Warburg Pincus in Czech IPO

Zentiva, a Czech pharmaceutical company backed by US private equity firm Warburg Pincus is to float on the Prague Stock Exchange at the top of its indicative pricing range.

Prague-based generics pharmaceutical company Zentiva has announced the final pricing of its IPO on the Prague Stock Exchange.

The book was five times oversubscribed and the stock was priced at the top of the range at CZK 485 per share ($18.44; 15.24). Based on this price, the market capitalisation of the company is approximately CZK 18.5 billion ($700 million; €580 million).

Warburg Pincus acquired a 67 percent stake in Leciva (as Zentiva was formerly known) in May 1998 and, along with the subsequent add-on acquisition of competitor Slovakofarma, has invested $125 million in total in the company.

Warburg Pincus received $125 million by way of dividend and will collect $85 million from the IPO. The firm has retained a 54 percent stake in Zentiva, worth approximately $380 million based on the issue price.

Commenting on the transaction, Nick Lowcock, a managing director at Warburg Pincus said: “The completion of Zentiva’s IPO is an endorsement of management’s dedication to building a highly regarded, financially successful company with a strong competitive position in the Central and Eastern European (CEE) pharmaceutical market.”

Following the IPO, which is expected to return gross proceeds of approximately CZK 2.7 billion ($102 million; €85 million) to Zentiva, the company plans to continue its expansion strategy into other CEE markets including Poland and Russia.

A spokesperson for Warburg Pincus said: “We are very pleased with the level of demand and strong investor interest. Warburg Pincus is a long term investor in the company.”

Since January 2000, Warburg Pincus has successfully been involved in six previous IPOs of life science companies and still retains a stake in five of them. The companies include: American Medical Systems, Wright Medical Group, Intermune, Zymogenetics, Kyphon and Medicines Co.

Merrill Lynch International acted as global coordinator, bookrunner and lead manager to the offer.