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Euronext stock market set for ICE spin-off

US stock market operator ICE began spinning off the pan-European market Euronext in an operation which could raise 1.75 billion euros and will leave three main operators fighting for business in Europe.

PARIS: US stock market operator ICE began spinning off the pan-European market Euronext on Tuesday in an operation which could raise 1.75 billion euros and will leave three main operators fighting for business in Europe.

ICE said on Tuesday that shares in the newly floated entity would be issued at 19-25 euros, valuing Euronext at 1.33-1.75 billion euros (US$1.8-2.37 billion).

The issue is backed by hard-core investors, and the guide valuation is in line with estimates by analysts.

The operation will re-draw the European landscape which will be dominated by, Euronext, the German Deutsche Boerse in Frankfurt, and the London Stock Exchange which operates the markets in London and in Milan.

Euronext, which operates the Paris, Amsterdam, Brussels and Lisbon stock markets, said it intends to develop its traditional cash payment trading activities, but also business in derivative instruments and in information services.

It intends to reduce costs by about 60 million euros in the next three years in order to raise annual turnover by about 5.0 per cent in the medium to long term and to achieve a gross operating margin of about 45 per cent.

Euronext chief executive Dominique Cerutti said in a statement: "We are delighted to launch the IPO (initial public offering) of Euronext with such strong commitment from leading institutions across Europe, a recognition of Euronext's potential as a leading pan-European exchange group.

"Euronext's role in supporting the real economies of Europe will be further strengthened by our independence..."

With the IPO, the company returns to being an independent company, having been acquired in 2007 by the New York Stock Exchange.

NYSE Euronext was then bought by the InterContinental Exchange (ICE) in 2013, but ICE was not interested in the European activities.

Euronext in the first place, was the result of a series of mergers around the Paris stock market which wanted to create a pan-European exchange.

The new entity is equivalent to the old Euronext, but shorn of the London financial futures market Liffe. This is being retained by ICE which wants to develop globally in this very competitive sector.

ICE will raise 880 million to 1.16 billion euros from the sale.

This is because ICE has confirmed that a hard core of shareholders which had undertaken to retain their holdings for three years will acquire 33.33 per cent of Euronext at a discount of 4.0 per cent from the issue price.

Among these investors are French bank BNP Paribas and its Belgian subsidiary Fortis, Societe Generale bank and the quasi-state savings giant Caisse des depots (CDC) and its subsidiary Bpifrance, together with the European clearing house, which matches and routes transactions, Euroclear.

Other members of this core group are Portuguese bank Banco Espirito Santo and BPI Vida e Pensoes, Dutch banks ABN Amro and ASR Nederland, and the Belgian state holding company SFPI.

These investors have been at loggerheads with governments, objecting to regulations which they say will reduce the profitability of Euronext.

Two institutional investors have also made an undertaking to buy about 2.0 per cent of the shares. These are the French energy giant GDF Suez and Belgian banking and insurance group KBC.

The public offer of the shares lasts until June 18 in Europe, and until June 19 for the private placing of stock in other countries including the United States.

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