Shares in eircom traded briskly but at a discount to their issue price today as the company returned to the stock market after a three-year absence.
Eircom shares dipped as much as 3.87 per cent to €1.49 from an issue price of €1.55 before closing at a bid price of €1.52 in Dublin.
Combined Dublin and London volumes amounted to around 175 million shares, over a third of the issued capital. In London, eircom was the second most heavily traded stock.
"It's reasonably well supported and more than likely to close at a slight premium to the strike price," one trader said.
Some dealers attributed a proportion of demand to hedge funds but said overall appetite was satisfactory, given that Belgium's Belgacom is due to price its own IPO shortly for a flotation expected to raise up to €4 billion.
Eircom had priced its initial public offering near the bottom of a €1.48-1.75 indicative range, giving it a market value of around €1.15 billion.
"It's been priced right for the cautious markets that we're in," said Mr Trisha McEvoy, analyst at Dublin's NCB Stockbrokers, noting the price would give a dividend yield of 7.1 per cent.
The owners, the Valentia consortium, comprising Providence Equity Partners, Soros Private Equity, Sir Anthony O'Reilly, and Goldman Sachs, are set to double their initial investment in eircom of €474 million, a return that is likely to rankle with investors who lost money first time around.
Eircom said around 467 million shares were being made available, including a primary offer of 138.7 million new shares to raise €215 million.
The company will make a secondary offer of 328.2 million shares and raise an additional €85 million from an employee share ownership trust (ESOT) rights issue, bringing its gross proceeds to €300 million.
New investors will own about 70 per cent of the company if an over-allotment of 10 per cent of the global issue is exercised.
Eircom has debts of around €2.3 billion and made a net loss of €72 million in the nine months to the end of 2003.
The company's main stake-holders shared a dividend of around €400 million last year.
Brokers Citigroup, Goldman Sachs, Morgan Stanley and Deutsche Bank are marketing the public offering.