Mota-Engil Africa Pulls IPO

Portuguese construction company Mota-Engil SA (EGL.LB) on Friday pulled the planned initial public offering of its African unit on the London Stock Exchange, citing "the recent significant deterioration in market conditions and the resultant impact on investor sentiment," after worries over the financial health of major Portuguese lender Banco Espírito Santo (BES.LB) spooked global markets.

The provider of engineering and construction services across Sub-Saharan Africa, which had only last month announced its plans to float, said Friday that despite a book of high-quality institutional orders within the announced price range, there wasn't enough demand to ensure a successful listing and aftermarket.

Shares in troubled Portuguese lender BES have been under pressure since May, when the bank disclosed that an audit ordered by Bank of Portugal into Espírito Santo International SA, the conglomerate that indirectly holds a stake in the bank, had found Espirito Santo International was in a "serious financial condition" and had uncovered accounting irregularities. But the declines mounted drastically Thursday after investors learned Espirito Santo International had delayed coupon payments relating to some short-term debt securities.

"Events and the performance of equity markets in the last 48 hours meant that the scale of orders was negatively impacted," Mota-Engil said, adding that it remains fully committed to achieving a successful public offering. The company announced in mid-June an indicative price range of 920 pence to 1,160 pence per share.

Mota-Engil joins a growing list of failed IPOs. Earlier this month, Shelf Drilling, a shallow-water offshore drilling contractor, cancelled plans to float, blaming public market conditions for its decision. In June, Hungarian budget airline Wizz Air canceled plans to list in London, citing market volatility in the airline sector, while student accommodation provider Liberty Living also blamed adverse market conditions for its decision to scrap its 400 million pount ($679.1 million) IPO.

Write to Ian Walker at [e-mail]

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