Telefonica narrows price range for listing

In a sign that Germany’s biggest initial public offering in five years remains on track, the Spanish group has told investors it is looking at selling shares for 5.50 to 6.00 euros apiece.

That compares with a 5.25 to 6.50 euro range set earlier this month.

“The books are well covered within this (new) range,” one of the sources said.

Europe’s largest telecoms company by revenue hopes to raise around 1.5 billion euros by selling part of its O2-branded German subsidiary, aiming to cut its 57 billion euro debt pile and hang on to its prized investment-grade rating.

O2 Germany – the biggest listing there since Tognum raised 2bn euros in July 2007 – joins a growing list of European companies looking to take advantage of a more positive climate for new stock offerings.

After months of inactivity, the European market for new listings has shown signs of life in recent weeks, with insurer Direct Line and Germany’s Talanx among those whose shares have risen on stock market debuts.

Telefonica will close the order books on its offering at 1pm on Monday and will then decide on the final pricing. The shares are expected to begin trading on October 30. Based on the new range, Telefonica would raise between 1.42 and 1.55 billion euros.

While bankers are saying there is strong investor demand for the shares, investors are predictably looking for a good deal.