Eurazeo-backed Europcar lists in €1.7bn IPO

Europcar began trading on the Paris stock exchange under the EUCAR ticker on 26 June. The flotation, taking place four months after unquote" learned of the listing plans, opened at €12.25 per share. The price falls towards the lower end of the €11.5-15 initial bracket that was made public last week.

The IPO saw Europcar raise €879m in proceeds. These include €475m reaped via the issuance of 38,775,510 new shares by the company, which intends to use the capital to meet the anticipated repayment of €324m outstanding subordinated notes, expected to mature by 2017. The business is aiming to reduce its corporate debt to 1.5x EBITDA, down from the 2.7x multiple recorded at the end of 2014.

In addition, Europcar shareholders Eurazeo and ECIP Europcar Sarl will sell €404m worth of shares, which could rise to €536m should the over-allotment option be fully exercised.

Of the €404m total, Eurazeo expects to reap around €350m through the flotation. After the IPO, the listed GP will retain 43.3% of the 86.79% stake it previous held in the business and remain as the largest shareholder. The figure could be diluted down to a maximum of 36.8%, taking into account the over-allotment option.

Meanwhile, fellow shareholder ECIP Europcarl Sarl will roll over 6.5% (5.5% if the over-allotment option is exercised in full) of the 12.98% stake it held pre-flotation. The public offering features a lock-up period of 180 days for the sale of further shares.

Deutsche Bank, Goldman Sachs International and Societe Generale acted as global coordinators, lead managers and joint bookrunners. Meanwhile, CM-CIC Securities was the appointed co-lead manager and BNP Paribas, HSBC France, Crédit Agricole Corporate and Investment Bank and Morgan Stanley acted as joint bookrunners.

Europcar's flotation is the second in France by Eurazeo since the beginning of 2015 and the largest in the country in the period, according to unquote" data. On 13 February, the buyout house supported its portfolio company Elis, a Paris-based laundry service provider, as it listed on Euronext. The IPO valued Elis at €1.48bn.

The listed GP has also been active on the public markets outside France this year. In May, it cashed €280m in proceeds as it divested an additional 7.8% stake in Italian luxury jacket brand Moncler, which had floated in Milan in December 2013.

Previous funding
The IPO comes nine years after Europcar was acquired by Eurazeo from Volkswagen for €3.08bn in 2006, a purchase price equalling 16.5x EBITDA at the time. Eurazeo's investment, initiated by the deployment of €900m in equity, represented one of the firm's most significant transactions until that point, Eurazeo CEO Patrick Sayer explained at the time.

The acquisition followed a competitive two-round auction process initiated in September 2005, when Volkswagen first announced it was considering either a sale or a listing for Europcar. As part of the corporate buyout, two senior debt facilities and a number of bridge loans were provided by Calyon, BNP Paribas, Societe Generale and Deutsche Bank.

In 2012, the French business refinanced part of its debt by raising €324m on the high-yield market. The refinancing saw shareholders, including Eurazeo, deploy an additional €110m to be later converted to equity, according to unquote" data.

Company
Headquartered in Paris and founded in 1949, Europcar is a car rental business. With around 6,500 employees, the group is present in 145 countries. Europcar posted revenues of €1.98bn in 2014, with a €213m EBITDA.

Following the IPO, the company foresees a 3-5% jump in its consolidated revenues and an EBITDA uptick to approximately €245m.

People
The flotation was led by Eurazeo chair Patrick Sayer and executive director Eric Schaefer. Philippe Germond chairs Europcar's management board.

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• Unq2015July