The stock exchange requires greater discipline, in terms of transparency and strategy definition

Portuguese postal group CTT successfully entered Euronext Lisbon on 5 December 2013. The CEO of CTT, Francisco Lacerda, discusses the operation and explains the benefits of listing.

What was CTT’s goal in listing on the stock exchange?

The main reason was for the Portuguese state to fulfil the conditions of the privatisation programme set out in the financial aid plan negotiated with the European Union and the International Monetary Fund in May 2011. Previously wholly owned by the state, CTT was among the list of assets that Portugal had agreed to sell. We also needed to acquire a shareholder base that would be capable of supporting the group’s future.

Are you satisfied with investor response and the results of the operation?

CTT’s introduction on the market on 5 December 2013 was undeniably a success. The introductory price of €5.52 per share was set in the upper range of the price spread considered, so the Portuguese government, which sold 70% of the capital of CTT, took in nearly €580 million – a good sign of investor enthusiasm. Institutional investors acquired 80% of the shares sold on the market, and thus hold 56% of our capital. The remaining 14% of capital was reserved for individual investors, including the group’s employees who benefited from preferential pricing at €5.24. The security has remained strong since the first day of listing and currently sells above its introductory price.

Is your presence on the stock exchange likely to influence your strategy?

Our dialogue with investors will probably have an influence on the group’s strategy. However, this is not a current concern. Our strategy was redefined before entering the market, and it is on this basis that we presented ourselves to investors. It would not be reasonable to revise it today. We will thus continue our efforts to generate cash flow via a multi-product strategy (mail, financial services) and a generous dividend distribution policy. We are committed to pay €60 million in dividends in 2014, or a distribution rate of our net profits of at least 90%.

What benefits do you think you will gain from this listing, and what advice would you give another company planning to enter the stock exchange?

Listing on the stock exchange gives us broader access to capital, which is clearly an advantage for the group’s development. It also has a more subtle, and I think positive impact, by requiring increased discipline, in particular in terms of transparency but also in strategy definition and implementation. And this is the advice I would offer a candidate for listing: develop a clear, coherent and realistic strategy that can be used to present extremely structured messages to investors. The experience has been a very positive one for us.