Belgacom's Eu3.6bn IPO was the first big test of European equity capital markets this year. A failure, bankers said, would have had serious consequences, not just for the recovering IPO market but for all ECM issues.
The deal's unequivocal success, against a backdrop of terrorism and falling stock markets, made it the obvious choice for IER's deal of the quarter.
"It was as good an execution as you possibly could have hoped for and the stock traded well afterwards," says one equity syndicate banker in London who worked on the deal. "This indicates that the equity culture, which was under scrutiny, delivered."
The deal was driven by the ADSB consortium, which sold the stake it has held in Belgacom since 1996. The consortium, which includes SBC Communications and Singapore Telecom, divested 38.4% of the company. The Belgian government did not sell any of its 51.6% stake.
Bookrunners Goldman Sachs, Lehman Brothers, Morgan Stanley and UBS placed the 133m shares at Eu24.50, below the midpoint of the Eu23-Eu26.50 range.
Bankers at the time said they were slightly disappointed with the pricing, but said it was to be expected given the state of European stocks at the time of the sale.
However, Belgacom performed well compared to Irish telephone company Eircom, which listed in the same week.
One of the most keenly analysed aspects of the deal was the performance of the retail tranche. Many ECM bankers say the return of private investors to the IPO market is essential to the success of other new issues planned for this year.
Belgacom's retail portion was increased from 15% of the IPO to almost 20% in response to the strength of demand, and was 2.5 times oversubscribed, raising Eu550m.
Investors' faith in the company has been well rewarded. Belgacom is one of the few newly listed shares this year to have risen above its issue price. Despite weak markets, it has gained about 1.5%, compared to Eircom, which fell 1.3% on its first day and is still trading slightly below its offer price.