O’Brien’s Digicel to raise up to $2.3bn in IPO

Digicel, the telecoms group owned by Irish businessman Denis O’Brien, is set to raise as much as $2.3 billion (€2 billion) when it lists on the New York Stock Exchange in the coming days.

In a submission to the Securities and Exchange Commission on Tuesday morning, the Caribbean and South Pacific based telecoms group set a price range for the upcoming flotation at between $13-$16 a share, with a total of 142.8 million shares to sell. The disclosure of the price range means that it’s likely that Digicel will list on the exchange over the next week to 10 days.

In the submission, Digicel said that its net IPO proceeds would be of the order of $1.7 billion, assuming a share price of $14.50. It expects to retire up to $1.3 billion in debt after the IPO.

The updated flotation documents for Digicel appear to show that Mr O’Brien is prepared to hand over up to 42.5 per cent of the company’s equity in its initial public offering next week, although he will retain 94 per cent of shareholders’ voting power.

It is not expected that Mr O’Brien will take anything out of the IPO. “We do not expect that any proceeds will be used to fund dividends to common shareholders,” the company said in the submission.

Using the $14.50 per share midpoint of the $13-$16 share price range the company is seeking, the documents also suggest Digicel has an enterprise value of about $10 billion, including its remaining debt. If it hits the upper end of the share price range, the company would be valued at up to $11.9 billion.

Mr O’Brien’s post-flotation share of the company’s equity would also be worth about $2.8 billion on paper using the midpoint $14.50 value, the documents suggest.

The offering is for 124.237 million class A shares, with an option to purchase a further 18.62 million of these shares open to the banks that are underwriting the flotation. Mr O’Brien’s 193.3 million Class B shares, which have 10 times the voting power, will convert to Class A shares as he sells down his stake on the market.

Founded by Mr O’Brien in 2000, Digicel launched mobile services in Jamaica, its first market, in 2001. It currently provides mobile communications services to 13.6 million subscribers in 31 markets across the Caribbean and South Pacific.

Its most recent financial figures show that in the three months to June 30th, it generated total revenue of $669.7m, an operating profit of $165 million, a net loss of $31.4m and adjusted earnings (EBITDA) of $277.5 million.

*This article was amended on 22nd December 2015.