Shares of the Italian payment group Nexi collapse when it debuts on the market

MILAN (Reuters) – Shares of the Italian payment group Nexi fell 6% on their debut on the Milan Stock Exchange, relieving the biggest public offering in Europe this year.

Nexi's shares were trading at 8.44 euros at 10.30 GMT, a level lower than the 9-euro level set by the offer last week, for a total amount of about 2 billion euros.

Formerly a banking slump, the payments processing industry is now considered one of the most lucrative and fastest-growing activities in the financial sector, although it faces competition from newcomers trying to disrupt the mode of remuneration of the merchants.

As part of a transaction valuing the company at 7.3 billion euros, including debt, Nexi has introduced 35.6% of the company into the market. This could reach 40.9% if an over-allotment option is exercised.

Nexi's prices are approximately 13 times the value of the company / earnings before interest, taxes, depreciation and amortization (EV / EBITDA) for 2020 and compare to a multiple of around 16 times for its competitors Worldline and Network International.

"In terms of EV on 2019 EBITDA, the multiples are roughly in line with WorldPay, sold to a US rival for $ 43 billion, a bit daring for the Italian company," said a trader.

Nexi, which manages electronic payments for the CartaSi credit card operator, was taken over at the end of 2015 by private equity funds Bain Capital, Advent International and Clessidra.

As part of this transaction, the funds sold a portion of their shares and now hold 62.6% of Nexi.

The fast-growing payment business is facing competition from newcomers who are exploiting technologies for alternative payment methods. In Italy, only 14% of purchases are made without cash, compared to more than half in the Netherlands, according to data from the research company Ambrosetti.

A second operator said the multiples were high, but that they reflected the expectations of growing growth over the next few years.

The boom in payment systems has maintained transactions, even though mergers in other sectors are blocked by concerns about trade tensions and the global economic downturn.

The Finablr group, based in the United Arab Emirates, has confirmed its intention to proceed with an IPO in London and the payment company Network International in the Middle East, introduced last week in London.

The agreements could help end the drought in the European IPO market, which saw revenues fall to $ 292 million in the first three months of 2019, compared to $ 13.9 billion year, according to Refinitiv data.

"The list is a starting point and not an end point," Nexi CEO Paolo Bertoluzzo told reporters on Tuesday.