Tallink IPO seen as a resounding success

  • 2005-12-07
  • Staff and wire reports
TALLINN - Estonian investors greeted the initial public offering of Tallink with unprecedented enthusiasm, as more than 1 percent of the population bought stock in the Baltic's leading ferry company.

The company's supervisory council established the final offer price at 82.5 kroons (5.27 euros) per share, almost exactly in the initial offering range.

Demand was approximately three times higher than the total amount of shares allocated in the retail offering. Some 16,040 small investors bought stock, while nearly all Estonian institutional investors subscribed to shares as well, analysts said.

Tallink said the total demand in the retail part of the offer amounted to 15,307,074 shares, of which approximately 97 percent were subscribed to in Estonia and only 3 percent in Finland.

A total of 34,732.000 shares, including 3,157,455 over-allotment shares were issued. Of all the shares, 29,522,200 or 85 percent are being sold and issued to institutional investors and 5,209,800 shares in the retail offering.

Henrik Igasta, head of corporate finance at Suprema, an investment bank, told the Baltic News Service that internationally, an IPO is regarded as successful if half of 1 percent of the population takes part in it.

By comparison, Eesti Telekom's IPO in 1999 fetched 8,200 retail investors, while some 2,200 bought shares in Tallinna Vesi (Tallinn Water) when it went public earlier this year.

Despite being the region's largest ferry service, Finns gave the IPO a cold shoulder. In recent weeks negative coverage in the Finnish press has hurt Tallink's image. An article in Helsingin Sanomat, a leading Finnish daily, on how Tallink ferries Romantika and Meloodia pumped their waste water into the Gulf of Finland triggered wide controversy in Finland.

The negativity has even provoked Estonian Ambassador to Finland Priit Kolbre to claim that, when it comes to issues involving Tallink, the Finnish media are biased, if not hysterical. At a seminar organized by the Tuglas Association in Helsinki, Kolbre sharply criticized articles of the Finnish press on the issue of Tallink's waste water. "The Finnish media's attitude to Tallink's activity has been anything but constructive and unbiased," he said. "The sometimes hysterical stance to the Estonian competitor and ungrounded and inadequate disparagement of its activities are disturbing."

Kolbre said these articles could have been due to Finns' negative attitude toward Tallink. Tallink is now the one Estonian company with a considerable position in Finland's economy, he added.

To be sure, competition between Tallink and its Finnish competitor, Viking Line, is set to heat up. The latter is hoping to boost its market share by at least 5 percent after introducing a new, high-speed ship on the lucrative Helsinki-Tallinn route.

The Finnish daily Turun Sanomat quoted Viking CEO Nils-Erik Eklund as saying that the company plans to boost its market share from 15 percent to at least 20 percent when it launches its new ship in January 2008. He said the ship was based on a new concept that combines characteristics of the traditional car ferry and speedboat.

Viking last renewed its fleet in 1997 when it launched the cruise ship Gabriella.

Viking Line has forecast that the time of traditional passenger ships will soon end and that the future belongs to large, high-speed ships that provide conveniences similar to cruise ships but can travel in any kind of weather and cover the distance between the two capitals in two hours.

Next year, Tallink will put a similar vessel into service on the same route. Its ship will be able to take on 600 fewer passengers than Viking's new one, though it will be able to handle twice as many cars.