Sunrise shares have a good start to trading on the Swiss stock exchange
Published: Friday, Nov 15th 2024, 14:40
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Sunrise is back on the SIX Swiss Exchange after an absence of almost four years. The shares exceeded expectations on Friday morning with an opening price of CHF 44.75. The telecoms provider has thus completed one of the world's largest IPOs of 2024.
The stock market debut was celebrated in front of a large audience. Sunrise CEO André Krause rang the traditional stock exchange bell in front of almost 100 people in the large hall at SIX and was beaming all over his face when the opening price was shown on the screen. He himself had expected a lower opening price, as he told the news agency AWP.
A good start to the stock market had been on the cards, but not such a good one. The day before, Sunrise's American depositary receipts ADS had risen by 6.2 percent to 48.00 dollars on the US technology exchange Nasdaq. This would have meant an opening price of around 43 francs in Switzerland.
Krause's smile grew even wider as the price continued to rise in early trading. At 9.25 a.m., it reached its high for the day so far of 46.97 francs. The executives of Sunrise, the Swiss stock exchange and the bankers involved started to pop the champagne.
However, the price then crumbled again and fell below the opening price of CHF 44.55 at midday. By then, a good 314,000 of the 71.36 million shares had been traded. The decline is not surprising given the poor sentiment on the stock market: the SPI market as a whole was down 0.8 percent at the same time.
Third largest IPO in the world
With a market capitalization of CHF 3.2 billion, Sunrise has achieved the third-largest IPO in the world this year. Only the IPOs of Lineage in the USA (5.1 billion dollars) and the Midea Group in China (4.0 billion dollars) were larger. In Switzerland, Sunrise is thus well ahead of the skincare specialist Galderma, whose IPO in March amounted to just under CHF 2.3 billion.
This marks Sunrise's return to the Swiss stock exchange, where the telecommunications group was previously listed from 2015 to 2021. However, after the takeover by the British-American cable network giant Liberty Global for CHF 6.8 billion, Sunrise disappeared from the Swiss stock exchange.
The group was merged with Liberty's Swiss cable network subsidiary UPC. This created a more potent challenger to top dog Swisscom, which gained more customers and market share. One aim of the merger was also to eliminate the respective weak points. Sunrise was given its own landline network, while UPC was given a cell phone network.
Stronger than before
Now Sunrise is making a comeback. The company is stronger on its return to the Swiss stock exchange than it was when it first appeared on the trading floor, said Krause. Sunrise wants to entice investors with high dividends. "We are paying around 3.30 francs per share," said Krause. Based on the opening price, this would result in a dividend yield of 7.5 percent.
The Swiss average is 2.5 percent, the top yields are 5 to 6 percent. Sunrise has made a good start with 7.5 percent, said Krause. In addition, the dividend is still tax-free. A total of at least CHF 240 million is to be distributed for the current year. And the dividend is set to grow in the future.
In the future, Sunrise will have more Swiss shareholders. As a subsidiary of Liberty Global, the company has had almost no Swiss shareholders to date. On the other hand, he does not expect an exodus of US investors. This is because he has heard in discussions with American investors that they find Sunrise interesting, said Krause.
Entrepreneurial freedom
With the spin-off from Liberty and the IPO, Sunrise will be released back into entrepreneurial freedom. Liberty has pledged CHF 1.2 billion to reduce Sunrise's debt.
Sunrise will not completely separate itself from the parent company in the future. Business relationships will remain in place. "Thanks to various service agreements, Sunrise will continue to benefit from the partnership with Liberty Global."
This secures the Swiss company access to Liberty's technology, financial and other services. For example, Sunrise will continue to purchase TV reception boxes from the British-American group for the next five years.
Operationally, this year and next year will still be transitional years without growth. From next year, operating profit after leasing costs (EBITDAaL) should then remain stable or grow slightly. Stable to low single-digit sales growth is then expected in the medium term.
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