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UPDATE 2-Denmark's ISS pulls float, casts doubt on Glencore

Published 03/17/2011, 02:58 PM
Updated 03/17/2011, 03:00 PM
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* Becomes biggest European casualty of market volatility

* Offer oversubscribed, cites worries over aftermarket

* Provides further impetus for Glencore to rethink IPO plans

(Adds detail, background)

By Kylie MacLellan and Quentin Webb

LONDON, March 17 (Reuters) - Denmark's ISS pulled its potential $2.8 billion listing, becoming Europe's biggest casualty of choppy markets and casting doubt on the chances of commodities giant Glencore's float.

The outsourcing group, which closed the books on its Copenhagen float earlier on Thursday, said concerns about volatile markets had prompted it to postpone, despite the offering being oversubscribed within its price range.

"The current volatile and uncertain market conditions do not allow us to launch the transaction and achieve a smooth transition into the public markets," ISS chairman Ole Andersen said in a statement.

Violence in Libya and Bahrain, and Japan's nuclear crisis have kicked the VDAX-NEW volatility index -- one of Europe's main investor fear gauges -- to its highest level in nine months earlier this week, while European shares slid to three-month lows.

ISS's success would be an important confidence marker, and other planned IPOs -- such as from Glencore, one of this year's most closely watched deals -- may now also be reconsidered.

"It is a surprise. I don't think many people expected this," said Martin Hansen, an analyst at Jyske Bank. "The big question now is whether this is a postponement for weeks, months or years. Or whether it is a cancellation."

French media group Lagardere pulled a planned listing of its 20 percent stake in pay-TV channel Canal+ on Wednesday, blaming market turmoil following the Japanese earthquake.

ISS, one of the world's largest private sector employers, with over 500,000 staff, had narrowed its price range to 100 to 110 Danish crowns on Wednesday, the bottom end of its original 100 to 135 Danish crown price guidance.

The firm, which started as a small security firm with 20 night watchmen, had hoped to raise 13.3 billion Danish crowns ($2.5 billion) from the sale of new shares to pay down a heavy debt legacy from when Goldman Sachs's private equity arm and Sweden's EQT bought it in 2005.

ISS's private equity owners, who had planned to keep the majority of their holding in the initial public offering (IPO), in January broke off talks on an $8.5 billion takeover by private equity firm Apax after they disagreed on price.

The duo were to provide some existing shares for a management share scheme and an overallotment option, bringing the total size of the IPO to around 15 billion Danish crowns -- a sale of up to 63.7 percent of the company.

Shares in ISS, which would have been Europe's largest listing so far this year, were due to begin trading on Friday.

Goldman Sachs and Morgan Stanley were joint global coordinators on the ISS share sale. Citigroup, Deutsche Bank, HSBC and Nordea were also joint bookrunners. (Additional reporting by Mette Fraende in Copenhagen; Editing by Will Waterman)

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