By Valentina Za and Andrea Mandala
MILAN (Reuters) - Italian payments group Nexi plans to list up to 43.2 percent of its capital in an initial public offering (IPO) next month as it strives to cut a debt burden which poses significant risks.
Nexi said on Friday the planned IPO, set to be one of Europe's biggest listings this year valuing its equity at up to 6.4 billion euros (5.51 billion pounds), would take place on April 16.
Controlled by private equity firms that bought it from a group of Italian banks in 2015, Nexi operates in the fast-growing payments business, which McKinsey expects to reach $3 trillion a year in revenue by 2023 as more people ditch cash.
In its IPO prospectus, which was given a green light on Wednesday by Italian market regulator Consob, Nexi said it expected to reap net proceeds of 684 million euros, while its shareholders could net up to 1.49 billion euros.
Nexi said it would use cash from the new share sale as well as 1.5 billion euros in fresh financing provided by a group of banks involved in the IPO to reduce debt.
In particular, it will partly repay a 1.375 billion euro bond maturing in 2023 as well as a privately-placed issue.
Nexi said in the prospectus it had 2.6 billion euros in debt at the end of 2018 on a pro-forma basis, costing the group five times its pro-forma net income in interest payments.
"The significant financial charges stemming from the group's debt could impair, going forward, the group's ability to invest in key areas such as technological infrastructures ... and keep up with innovation in its sector," Nexi said.
Incumbents such as Nexi face competition from newcomers tapping new technologies for alternative payment methods.
The group said debt commitments limited its ability to pay dividends and it would not distribute 2019 profit to shareholders. In the longer term it said it was targeting a payout ratio of 20-30 percent.
Nexi is issuing new shares for up to 700 million euros in the IPO while private equity owners Bain Capital, Advent and Clessidra will reduce their combined 94 percent holding to as low as 56.5 percent by listing existing shares.
Italian banks Banco BPM, Credito Valtellinese, Popolare di Sondrio are set to sell part of their stakes.
(Reporting by Valentina Za and Andrea Mandala; Editing by Alexander Smith)
