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Wanadoo rises after IPO
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July 19, 2000: 8:15 a.m. ET
French ISP rises 6% after selling shares at 19 euros; valued at $19.3B
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LONDON (CNNfn) - Shares of French Internet access provider Wanadoo rose 6 percent in Paris on Wednesday after France's largest initial public offering of shares in an Internet company was 16 times oversubscribed.
Wanadoo, the online services division of France Telecom, rose to  20.09 after the parent company priced the stock late Tuesday at 19 per share, at the high end of the expected range of 17 to 20 euros. In pre-official trading Wednesday the stock had been as high as 28.
The state-controlled phone company sold 9.3 percent of Wanadoo. The firm was valued at 20.8 billion at the offer price.
The listing will land France Telecom 1.9 billion to fund Internet acquisitions overseas, while providing Wanadoo with traded equity that it can use to pay for corporate acquisitions. The ISP's aim is to have 10 million clients in Europe by 2003, up from 1.8 million at the end of April.
Analysts said the shares could have further to rise, given the huge demand for stock in the IPO.
The company's shares trade at a discount of 30 percent to rival ISP T-Online International AG, according to analyst Morten Andersen of Deutsche Bank. T-Online, Europe's largest ISP, was floated earlier this year by Deutsche Telekom AG (FDTE), France Telecom's rival.
Spanish operator Telefónica paved the way for such deals with a highly successful IPO of its Internet arm Terra Networks SA late last year. Several other former state-owned telecom firms intend to follow the same path, including Switzerland's Swisscom.
Individual buyers get lion's share
France Telecom's allocation of shares in the IPO favored individual French investors, handing them 52 percent of the shares offered, up from the 40 percent first penciled in. Institutions were left with 43.2 million shares, rather than 54 million. But an additional 13.5 million shares will be available to the banks leading the issue.
The public could end up with as much as 10.5 percent of Wanadoo's capital if certain options are exercised, with the rest owned by France Telecom. The parent company is 61-percent owned by the French state.
Analysts have said the price range had been pitched to entice investors, still wary of Internet companies' valuations after a big retreat in technology stocks earlier this year. A succession of new share issues on the Paris market had also prepared Wanadoo's owner for a cool reception.
While Wanadoo made an operating profit in 1999, the cost of acquiring new clients is expected to force the company into the red in the coming years.
The heavy demand for Wanadoo shares, which France Telecom said far exceeded its forecasts, comes in stark contrast to two recent public offerings for "old-economy" companies. Shares in aerospace powerhouse EADS (PEAD) had a lukewarm reception last week and are still below their IPO price of 19, while Vivendi (PEX) postponed an IPO of its water supply and environmental services unit amid poor demand from institutional investors. 
-- from staff and wire reports
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France Telecom
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