Italy's De Nora bets on cornerstone investors to defy IPO drought

By Francesca Landini and Lucy Raitano

MILAN (Reuters) -Italy's Industrie De Nora is counting on cornerstone investors to defy volatility that has inhibited several initial public offerings in Europe this year.

The electrode maker said on Monday it was seeking a valuation of up to 3.28 billion euros ($3.45 billion) in its IPO, which will be the first major listing in Milan since Russia invaded Ukraine on Feb. 24.

The transaction is expected to start on June 22 and could be completed at the beginning of next week to reduce the impact of market turbulence to a minimum, two sources with knowledge of the matter said.

The company, founded in 1923, is a leading manufacturer of electrodes for electrochemical devices such as rechargeable batteries and makes systems for water filtration and waste water treatment as well as components to produce green hydrogen.

Both European and U.S. listings have paused since the Ukraine conflict started in February, with activity in Europe and the United States down 88% and 90% in the first quarter, respectively, from a year earlier.

Germany's Thyssenkrupp said on Friday it would not pursue an IPO of its hydrogen division Nucera in current market conditions.

De Nora set a price range on Monday of between 13.50 and 16.50 euros per share for its listing, valuing the group at 2.72 billion-3.28 billion euros after taking into account the capital increase from the sale of new shares.

The group's current investors - the De Nora family and Snam - are going ahead at a valuation below analysts expectations as they aim to raise funds to develop the business quickly in a highly competitive sector, one of the sources said.

Two sources had told Reuters in early June that De Nora could be valued at more than 4.5 billion euros.

The group said it would offer 17.4% of its shares on the market, a bit less than expected few weeks ago.

Despite market volatility, the listing is expected to be supported by investor interest for De Nora's business related to energy transition and also by a strong backlog of orders the company can count on.

CORNERSTONE INVESTORS

The Garrone family, which is the controlling shareholder of Italian energy group ERG, and 7-Industries Holding BV, an investor specialising in high-tech industrial companies, will commit to buying shares for up to 100 million euros each, De Nora said. This should result in the two investors taking more than a third of the offer.

The Garrones will represent an industrial investor, another source said, adding that UniCredit facilitated the family's participation in the transaction, which also envisages a seat on De Nora's board for ERG vice chairman Alessandro Garrone.

Another source stressed that the commitment of cornerstone investors was well considered on the market since they were seen as strategic partners for the development of the group.

Credit Suisse and Goldman Sachs International are acting as joint global coordinators and joint bookrunners, BofA Securities, Mediobanca and UniCredit are joint bookrunners.

Latham & Watkins is acting as legal advisor to the company, legal firm Pedersoli is advising the De Nora family and Clifford Chance is advising the joint global coordinators and joint bookrunners.

Controlled by the De Nora family with a 64% stake, with the rest owned by Snam, the group reported revenue of 616 million euros with a core profit of 127 million euros in 2021.

($1 = 0.9503 euros)

(Additional reporting by Giulia Segreti;Editing by Agnieszka Flak, David Goodman and Susan Fenton)