Portuguese construction company Mota-Engil SA (EGL.LB) on Friday
pulled the planned initial public offering of its African unit on
the London Stock Exchange, citing "the recent significant
deterioration in market conditions and the resultant impact on
investor sentiment," after worries over the financial health of
major Portuguese lender Banco Espírito Santo (BES.LB) spooked
global markets.
The provider of engineering and construction services across
Sub-Saharan Africa, which had only last month announced its plans
to float, said Friday that despite a book of high-quality
institutional orders within the announced price range, there wasn't
enough demand to ensure a successful listing and aftermarket.
Shares in troubled Portuguese lender BES have been under
pressure since May, when the bank disclosed that an audit ordered
by Bank of Portugal into Espírito Santo International SA, the
conglomerate that indirectly holds a stake in the bank, had found
Espirito Santo International was in a "serious financial condition"
and had uncovered accounting irregularities. But the declines
mounted drastically Thursday after investors learned Espirito Santo
International had delayed coupon payments relating to some
short-term debt securities.
"Events and the performance of equity markets in the last 48
hours meant that the scale of orders was negatively impacted,"
Mota-Engil said, adding that it remains fully committed to
achieving a successful public offering. The company announced in
mid-June an indicative price range of 920 pence to 1,160 pence per
share.
Mota-Engil joins a growing list of failed IPOs. Earlier this
month, Shelf Drilling, a shallow-water offshore drilling
contractor, cancelled plans to float, blaming public market
conditions for its decision. In June, Hungarian budget airline Wizz
Air canceled plans to list in London, citing market volatility in
the airline sector, while student accommodation provider Liberty
Living also blamed adverse market conditions for its decision to
scrap its 400 million pount ($679.1 million) IPO.
Write to Ian Walker at ian.walker@wsj.com
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