Nexi Declines in Milan After Europe’s Biggest IPO This Year

(Bloomberg) -- Nexi SpA fell in its Milan market debut, damping enthusiasm for Europe’s biggest initial public offering of the year, as some analysts suggested the stock may have been priced incorrectly.

The payment services specialist, whose listing raised 2.01 billion euros ($2.27 billion), declined 6.2 percent to 8.44 euros from an IPO price of 9 euros. That was also the second-worst debut performance in a European IPO this year. The chief executive officer warned against drawing early conclusions.

“A good company at the wrong price,” said Stefano Girola, a portfolio manager at Alicanto Capital SGR in Milan. “I am not particularly surprised by the negative performance of Nexi, which in my view was wrongly priced on expectations that rarity value would have boosted demand.”

A mix of existing and new shares had been sold to more than 340 investors from around the world. Still, while demand from local and international investors was strong, the company offered shares at the bottom of a narrowed range. The IPO included a capital increase of 700 million euros.

The IPO of the Italian credit-card issuer and cash-machine manager is the third major offering for a payment-processing institution in the region in less than a year, following Network International in London in April and Adyen NV in Amsterdam in June.

Nexi Declines in Milan After Europe’s Biggest IPO This Year

“The Nexi IPO is a source of pride for the country,” CEO Paolo Bertoluzzo said during an opening ceremony at the Milan exchange. “The share price should be viewed over time, this is only day one.”

Caution in Order?

“It’s too early at this point to make an accurate assessment as to whether this IPO could go the same way as recent IPOs in terms of being potentially overvalued,” said Michael Hewson, chief market analyst at CMC Markets UK. “It would appear that caution has become the order of the day when it comes to IPOs rather than diving straight in.”

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The Nexi IPO is the largest in Europe since German brake maker Knorr-Bremse AG’s 3.8 billion-euro share listing in October. It is also the biggest in Milan since Pirelli & C. SpA returned to the market in 2017.

Milan-based Nexi is Italy’s biggest payment service company, operating in merchant servicing, card payments and digital solutions. It has partnerships with about 150 Italian banks and a 60 percent market share in card issuing. The company posted net income of 20 million euros last year. Investors include Advent International, Bain Capital and Clessidra SGR.

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