Portugal’s Postal Service Rises as Five-Year IPO Dearth Ends

Portugal's mail service, CTT-Correios de Portugal SA, rose on the first day of trading after the 493-year-old company held the country's first initial public offering in five years.

The stock climbed as much as 7.8 percent to 5.95 euros from the IPO price of 5.52 euros, the top of the price range. CTT traded at 5.77 euros as of 11:42 a.m. in Lisbon, giving the company a market value of 867 million euros ($1.2 billion).

Portugal's 78 billion-euro bailout package from the European Union and International Monetary Fund requires the government to dispose of assets to raise revenue. The U.K. sold a majority stake in British counterpart Royal Mail Plc (RMG) in October at a price that some lawmakers said was too low. Those shares jumped 38 percent in their trading debut.

"Investors are buying CTT shares to take advantage of similar successful IPOs by other other European mail service companies," said Joao Queiroz, a trader at Banco Carregosa SA's Go Bulling brokerage in Lisbon. "CTT's attractive dividend payout policy may also be boosting interest in the stock."

Dividend Policy

The company plans to pay dividends representing at least 90 percent of distributable profit in 2014 and in the following years, according to the IPO prospectus. Nine-month net income rose 28 percent to 45.2 million euros.

The Portuguese government raised about 579 million euros from the disposal of a 70 percent stake in Lisbon-based CTT. Of the 105 million shares offered, 21 million were sold to individual investors through the IPO and the rest went to institutional investors. State holding company Parpublica retains a 30 percent stake in CTT.

Portugal completed the sale of airport operator ANA-Aeroportos de Portugal SA for 3 billion euros to Vinci SA, Europe's biggest builder, in September. The government has also sold stakes in utility EDP and in energy grid operator REN-Redes Energeticas Nacionais SA. The country's last IPO was when EDP-Energias de Portugal SA sold a stake in renewable-energy unit EDP Renovaveis SA in June 2008.

CTT, which is expanding its express-package delivery service to new markets as consumers purchase more online, said on Nov. 29 that it obtained a license from the Bank of Portugal to also operate as a bank. CTT's logo still appears on mailboxes and buildings in some of Portugal's former colonies in Africa.

Caixa Banco de Investimento SA and JPMorgan Chase & Co. were global coordinators and bookrunners for the IPO, with Banco Bilbao Vizcaya Argentaria SA and Espirito Santo Investment as co-lead managers.