Apr 5, 2016
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Finnish retailer Tokmanni plans flotation despite weak economy

Apr 5, 2016

Finland's largest discount store chain Tokmanni Group, majority owned by buyout house Nordic Capital, is preparing for a stock market flotation in what could be Finland's biggest listing in a decade.

Nordic Capital said on Tuesday it would retain a stake in Tokmanni after a flotation which is planned for between now and the end of June in Helsinki. It did not specify how much of the company it would sell and also said there would be some new shares issued to raise cash for the business.

Nordic currently has an 83 percent stake, with wholesaler Rockers Tukku and Tokmanni's management holding the rest, according to the company's website.

Sources told Reuters last July that Nordic Capital was considering an exit in a deal that could value the company at around 900 million euros ($1 billion), including debt.

A listing of Tokmanni could be Finland's largest since the float of oil refining company Neste Oil Oyj which raised $745 million in 2005.

Tokmanni, with 156 stores, had sales of 755 million euros and an underlying operating profit margin of 5.8 percent in 2015.

Tokmanni's plans come at a time of weak consumer demand in recession-hit Finland, but the company says it expects to benefit from customers becoming increasingly price conscious.

Chief Executive Officer Heikki Vaananen said the company was looking to open 50 new stores in Finland but was not preparing expansion to new markets at the moment.

"The economic slump drives demand from high-end to discount stores. But if we see no recovery in Finland, even the discount stores can only grow by opening new units," said Sauli Vilen, analyst at Inderes Equity Research.

Compared to its Nordic neighbours, Helsinki stock market has seen few listings lately as the euro country's economy is slowly recovering from a three-year recession.

Tokmanni's peers include Sweden's Clas Ohlson and Jula, and the Norwegian retailer Europris, which Nordic Capital listed in Oslo last year. In 2014, Tokmanni was the biggest Nordic discount chain by sales.

Goldman Sachs, Nordea Bank, BofA Merrill Lunch and Carnegie were named as joint bookrunners to the issue, with Sundling Warn Partners as financial adviser.

$1 = 0.8802 euros


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