Blue Lagoon IPO could offer investors a rare tourism stock

The planned listing of the Blue Lagoon could give investors a rare opportunity to buy into an Icelandic tourism company, analyst Alexander Jensen Hjálmarsson told mbl.is. He said the business was performing reasonably well, while noting that uncertainties could affect the share offering.

Jensen Hjálmarsson, an analyst at Akkri who has followed the company for years, said a listing could broaden the range of companies on the Icelandic stock exchange. He described the Blue Lagoon as a clearly focused “pure play” in Icelandic tourism, unlike Icelandair, which he said was not a conventional Icelandic tourism company.

The company’s board plans to complete the listing this month, according to coverage by Morgunblaðið and mbl.is. It has not disclosed the intended share price. In an interview earlier this year, the company’s chief executive said recent share transactions had implied a market value of 83 billion krónur.

Reports this summer about a proposed merger with tourism company Arctic Adventures suggested the combined business could be worth more than 100 billion krónur, with a share offering potentially bringing in 10 billion krónur. At that valuation, the Blue Lagoon would rank as the ninth most valuable company on the exchange, between Ísfélagið, valued at 123.5 billion krónur, and Festi, valued at just over 90 billion.

The biggest uncertainty, Jensen Hjálmarsson said, is that the Competition Authority has not yet ruled on the proposed merger. He said it would be preferable for the deal to be completed before the Blue Lagoon is listed, noting that Arctic Adventures’ operations could account for about a third of the combined company’s revenue. He said about 95 per cent of the companies’ revenue came from foreign visitors and that the merger would have little or no effect on domestic consumers.

Jensen Hjálmarsson said the listing could help the company raise capital and potentially attract foreign investors to Icelandic shares. He said the Blue Lagoon had no equivalent elsewhere in the world, adding that some investors might see an opportunity to buy a stake in it as “like being given the chance to own a share of the pyramids.” The mineral-rich geothermal seawater lagoon began forming near the Svartsengi power plant about half a century ago.