PARIS/NEW YORK (Reuters) - Shares in Cnova rose 9 percent on their first day of trading on the New York stock exchange on Thursday after tough market conditions forced French parent Casino (CASP.PA) to price the its e-commerce business well below the initial indicative range.
Cnova CNV.O competes with global online retailer Amazon.com (AMZN.O) and sells consumer electronics, computers and home appliances.
Shares opened at $7.63 on New York-based Nasdaq, above its offer price of $7 per share. Retailer Casino priced the initial public offering well below the $12.50-$14.0 target range.
Cnova’s debut follows a surge in e-commerce initial public offerings activity this year, culminating in the bumper New York flotation of China’s Alibaba (BABA.N) in September.
However, major global online retailers have not done well in recent months, with Amazon’s sales forecast for the crucial holiday quarter disappointing Wall street.
A lacklustre stock market debut by Europe’s largest online fashion retailer Zalando (ZALG.DE) in Frankfurt and a deteriorating economic climate in France and Brazil where Cnova makes most of its business also dampened investors’ appetite.
Barclays analyst Nicolas Champ said the lower IPO price was “a major blow” for Casino, which he said wanted to “crystalise” the value of the division in its Sum-Of-The Parts valuation while also strengthening its balance sheet by raising cash.
The IPO price valued Cnova at 2.3 billion euros, well below the 4.1 billion-4.5 billion valuation of the IPO range.
Casino said in a statement it expected gross proceeds of $188 million from the sale of 26,800,000 ordinary shares, representing up to 7 percent of Cnova’s capital.
Bernstein analyst Bruno Monteyne said the complex ownership structure of Cnova and the small size of the offering might also have made the listing “less appealing” to investors.
By 1111 EST, Casino shares were down 4.11 percent at 81.04 euros in Paris, having fallen 5 percent earlier in the day.
A source close to the matter said Casino had favoured going ahead with the operation in order to get a foot in the U.S. market and stressed the size of the deal was rather small, which also limited risk.
($1 = 0.7971 euro)
Reporting by Dominique Vidalon,Leigh Thomas,Additional reporting by Gwenaelle Barzic in Paris and Agrawal Tanya and Sikka Kanika in Bangalore; Editing by Nick Vinocur and David Evans