Exclusive: Cash-hungry Alstom points to IPO for rail arm as early as June
By Natalie Huet and Benjamin Mallet
PARIS (Reuters) - Cash-hungry engineering firm Alstom may use a stock market listing to sell a stake in its transport business as early as June if a trade buyer cannot be found sooner for the maker of France's iconic high-speed trains, its transport chief said.
Alstom (ALSO.PA: Quote) announced in November it was seeking a buyer for the transport business, auctioning the family silver after a collapse in orders for its larger power business punched a hole in its balance sheet, battered its market value, and brought its debt within a notch of "junk" ratings.
Three months later, the need is as strong as ever and no obvious buyer has emerged, so the company's favored route is now an initial public offering for the transport unit, which is the world's number two maker of railway equipment behind Canada's Bombardier (BBDb.TO: Quote).
The transport unit's boss, Henri Poupart-Lafarge, said an IPO would allow the parent firm to raise cash without closing the door to an alliance with a strategic investor later on.
"A stock listing is interesting because it can pave the way to partnerships and consolidation in a rather competitive market," he told Reuters. He predicted a listing could come as early as June.
The group slashed its profit and cash-flow targets in January, and its shares have hit eight year lows this week. The company hopes to raise up to 2 billion euros ($2.7 billion) this year via the stake sale and divestment of some other assets.
Valuations for the transport business vary between 2.8 and 3.9 billion euros, suggesting Alstom could raise between 700 million and 1.9 billion for a stake of a quarter to a half.
Alstom Transport is the smaller of its two main businesses, but has seen steady growth while the bigger power generation business has stalled. Continued...