Shares in Premiere the German pay-TV operator startedtrading today on the Frankfurt stock exchange at a healthy premium to the offerprice.
The strength of investor demand suggests that analystssee the business continuing to grow, a prospect which could rub off on thelocal film industry.
The company yesterday announced that it would sell theshares at Euros 28 each having seen its offer twelve times subscribed at theEuros 24-Euros 28 range. In early trading this morning the shares rose to Euros30.5, a 9% premium to the offer price. At this level the company is valued atEuros 2.68bn.
The share issue raised some Euros 500m of fresh cashfor Premiere. The new money will largely be used to reduce debt. That isexpected to put it in a strong position in the forthcoming round of contractnegotiations with content suppliers.
Having been a substantial loss-maker and a majorelement in the collapse of the Kirch group, Premiere is today seen as aturnaround success story. In the hands of the investment group Permira andchief executive Georg Koffler, the company now has some three millionsubscribers and is forecast to make over Euros 200m in 2006.
Analysts are divided as to whether Premiere's 8%market penetration represents substantial upside or reflects the difficultythat it has in competing against cable TV and the country's 30-plus freechannels.