Owned by Irish billionaire Denis O’Brien, Digicel had expected to raise $2 billion from its US IPO, but the company has now pulled the plug over concerns that market conditions will mean it is not fairly valued.
The firm said that it had seen a series of flotations joining the stock market at lower than expected prices and O’Brien said that the IPO was now “a less attractive route for us”.
Last week all five companies that entered the stock market did so below the expected price range, and the recently ended third quarter is said to be the worst in terms of US stock market performance since 2011.
Market watchers have raised concerns over Digicel’s IPO regardless of today’s cancellation.
“Their revenue is flat, they are losing money, the company is not growing – it would not be seen as the most attractive of investments,” Jay Ritter, professor of finance at the University of Florida, told Reuters.
Digicel had planned to use the IPO funding to reduce its $6 billion debt figure, and last month the company also indicated that it would use some of the cash on acquisitions.
However, O’Brien said that Digicel does not have to pay of any debt until 2021, and added that its growth plans remain unchanged.
“We remain in a strong position to exploit areas of interest in data, business solutions, cable TV and broadband,” he said.
