* Offering values Pandora's equity at up to $5.1 billion
* Offers 44.5 million existing shares, 2.7-3.4 million new
* Offering worth up to $2.16 bln at indicated price range
(Adds analyst, CEO comment, background)
By Anna Ringstrom and John Acher
COPENHAGEN, Sept 20 (Reuters) - Danish jewellery maker Pandora A/S launched an initial public offering of up to $2.16 billion of stock, testing investors' confidence in its growth prospects as well as the European IPO market in general.
Monday's offering by the company which gets nearly all its revenue from charm bracelets will provide a partial exit to its majority owner, private equity firm Axcel, and the founding family.
Pandora set a preliminary 175 to 225 crowns per share price range, which it said valued its total equity at up to 29.2 billion ($5.1 billion).
The IPO will consist of 44.5 million existing shares and 2.7 to 3.4 million new shares, plus an overallotment option -- also known as a greenshoe -- of 6.7 million existing shares.
At the indicated price range, the IPO would be worth $1.45 billion at the low-end price, without the overallotment shares, and up to $2.16 billion at the top price with the greenshoe.
Sydbank analyst Soren Hansen said Pandora would probably price at the bottom of the indicated range, based on a peer analysis and a forecast for 2010 earnings before interest, tax, depreciation and amortisation of 2.5 billion crowns.
"You also have to discount net debt of 2 billion. That puts the market capitalisation at 21 to 25 billon crowns," Hansen said. "That suggests ... that the selling price will land at the lower end of the 175 to 225 crown range."
GROWTH INJECTION
Jesper Poll, portfolio manager at Danske Invest, pointed to uncertainty around Pandora's track record and the sustainability of its business model which is highly reliant on one product -- a bracelet for which owners can buy charms to mark life events or friendships.
Pandora's "create and combine" bracelets and charms accounted for 86 percent of sales in the first half of the year.
"Pandora is one of the trickier companies to value," he said. "We would be inclined to see the value only in the lower part of the announced price range."
He said there was a lack of pro forma like-for-like data and little information on underlying market trends and the impact of the distribution mix upon sales and profitability.
"And it's nearly all about one product. It's almost certain it is a (fashion) trend and that it will fade out at some point. It is unclear whether they will be able to brand themselves with other products," Poll said.
Pandora Chief Executive Mikkel Olesen told Reuters nothing indicated the charm bracelets were a fad, though he added the firm needs to get better at marketing its other products.
The IPO price will be determined through a bookbuilding process from Sept. 23 to Oct. 4 and the shares are due to begin trading on the Copenhagen bourse on Oct. 5, Pandora said.
"The free float will be at least 35.7 percent, excluding the overallotment option," Pandora said.
One banking source close to the deal said shares in Pandora, whose jewellery costs up to $1,500, were being offered cheap compared to well-known luxury goods makers.
The price range represents a valuation of 10.6 to 13.5 times expected earnings, while luxury jeweller Tiffany for instance trades above 15 times earnings and Bulgari at more than 20 times, the source said.
Pandora, which had 2009 sales of 3.46 billion crowns, said the sale of new shares would raise around 600 million crowns that it would use to finance growth.
Private equity firm Axcel controls 59.3 percent of Pandora's shares while the rest is owned by the founding family.
Goldman Sachs, JP Morgan, Morgan Stanley and Nordea will be joint global coordinators and bookrunners for the IPO, while Carnegie and SEB are co-lead managers. Rothschild and FIH Partners are financial advisors to Pandora and Prometheus Invest, a vehicle controlled by Axcel.
Pandora's offering follows a flotation in Copenhagen in June by food ingredients maker Chr. Hansen, the bourse's first major listing in years. Cleaning services firm ISS is also mulling an IPO and a large share sale by the main owners of telecom TDC is widely expected by analysts. (Additional reporting by Peter Levring and Shida Chayesteh in Copenhagen and Chris Vellacott in London; Editing by Louise Heavens and David Holmes) ($1=5.688 Danish crowns)