January 9, 2020 / 8:49 AM / a month ago

UPDATE 2-Smart meters firm Calisen to test London IPO waters

* First major test of UK market sentiment in 2020

* KKR looking for valuation of up to 1.5 billion pounds

* Supplies smart energy meters to UK households (Adds CEO, sources, background)

By Abhinav Ramnarayan and Noor Zainab Hussain

Jan 9 (Reuters) - Calisen Group, which supplies smart meters to British households, plans to list its shares in London in a test of investor appetite after a tough year for flotations.

Owned by private equity firm KKR, the company is targeting a valuation of 1.3-1.5 billion pounds ($1.69-1.95 billion) in a potential listing on the London Stock Exchange, a source familiar with transaction said on Thursday.

It expects to raise about 300 million pounds from the sale of new shares, it said in a statement. The offering will include a share sale by some current shareholders and the aim is to list shares in early February.

Those involved in the Calisen deal feel confident they can overcome potential obstacles after a weak year for capital raising.

London IPOs in 2019 fell to their lowest level in a decade, Refinitiv data showed.

"We have spoken to a few investors before launching, and that has given us confidence in this process," said Calisen CEO Bert Pijls.

"It is a domestic infrastructure asset that is not cyclical and not really affected by customer sentiment."

Calisen consists of two businesses -- Calvin Capital, through which it owns and manages a portfolio of domestic electricity and gas meters, and Lowri Beck, under which it carries out installation, meter reading and maintenance services on behalf of energy retailers.

The UK government wants every home in Britain to be fitted with a smart meter tracking energy consumption. However, the government has delayed the deadline for the roll-out to 2024 from 2020.

Calisen said net proceeds from the IPO would be used to support growth, repay debt and fund existing and new contracts relating to the smart meter roll-out in Britain.

TEST CASE

"This will be a test for sentiment towards the UK, the IPO market and equities in general," said a second source familiar with the transaction.

"Certainly there's an expectation there's a clear window for the next few months before the negotiations on the trade agreement (between Britain and the EU) come more in focus."

The Conservative Party's clear victory in Britain's election last month has helped to break a political stalemate over Brexit.

"The election was always going to create some uncertainty, but now that it is behind us we as a company have a lot of growth to fund so we thought this was the right time," said Pijls.

Credit Suisse, KKR Capital Markets, Citigroup and HSBC Bank, Barclays Bank and Goldman Sachs will be the joint bookrunners for the proposed IPO.

$1 = 0.7678 pounds Reporting by Noor Zainab Hussain in Bengaluru and Abhinav Ramnarayan in London; editing by Saumyadeb Chakrabarty and Jason Neely

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