A historic transaction for Iceland: the largest Icelandic IPO ever
We are pleased to announce that STJ Advisors acted as independent financial advisor to ISFI on the up to US$457m Initial Public Offering of Íslandsbanki hf., one of Iceland’s leading banks
Íslandsbanki is a customer-centric universal bank with market shares in excess of 30% in Personal Banking, Business Banking and Corporate & Investment Banking sectors. Prior to the IPO, the bank was wholly owned by ISFI on behalf of the Treasury of Iceland. Following the Offering, ISFI will hold 65% of the share capital of the bank, assuming full exercise of the overallotment option. Other Icelandic investors will hold approximately 24% and international investors approximately 11%. The market capitalisation of Íslandsbanki at the final offer price is US$1.3bn. The IPO is the largest in Iceland’s history.
STJ advised on all aspects of an intensive and accelerated IPO process including development of the equity story, the appointment and management of an 11-bank Icelandic and international syndicate, management of a combined domestic / retail and broader global offering, the investor marketing process and the key decisions on sizing, pricing and allocation of the IPO to achieve a balanced distribution among Icelandic retail and institutional investors and international investors.
The IPO took less than 4 months to complete from STJ’ appointment, an extraordinarily short execution period, in particular for a privatisation by way of IPO during a very busy European IPO calendar.
At commencement of bookbuilding, it was announced that Capital World, RWC Asset Management, Gildi-lífeyrissjóður and Lífeyrissjóður verzlunarmanna had committed to be cornerstone investors throughout the agreed price range. This is the first time cornerstone investors have formed part of an Icelandic IPO without an offshore listing. The books were oversubscribed on the first day of book building, across the entire price range and on the full deal size, with momentum continuing throughout the offer period. The final price was set at ISK79, the top of the ISK71 - 79 range, at 10.5x P/E 2022E, a premium to the Nordic comparables. There was substantial interest from both retail and institutional investors, resulting in total demand of US$4.0 billion. More than 23,000 retail orders were placed, more than double the next largest retail participation in Icelandic history and representing c. 9% of the Icelandic adult population. As a result, Íslandsbanki will have the most diverse shareholder base of any Icelandic company.
For the first time in Iceland, a purely domestic listing was run according to international practices and in spite of the lack of an offshore listing there was very strong participation from high quality international investors. To accommodate those investors not able to hold Icelandic equity securities, STJ actively encouraged the syndicate banks to put in place a swap product to enable such investors’ participation following an extensive survey prior to launch to assess international investors’ ability to hold ISK-only denominated stocks.
STJ is proud to have helped ISFI and the Government of Iceland to achieve its stated objectives in this highly successful privatisation.
“This is a significant milestone in ISFI‘s management of the government‘s holding in financial undertakings and a great achievement for all parties involved. The offer was very well received and generated high demand from all investor types, both domestically and internationally. It has been a great pleasure to witness the momentous retail demand which will give Íslandsbanki the largest shareholder base of any company on Nasdaq Iceland.”
Lárus L. Blöndal, Chairman of the Board of Directors of ISFI