GDANSK/WARSAW (Reuters) - Polish convenience store group Zabka plans to raise up to 6.45 billion zlotys ($1.67 billion) for shareholders in its initial public offering this month, potentially the biggest IPO in Warsaw since 2020.

The company said on Tuesday it aimed to sell shares at between 20.0 and 21.5 zlotys each. That would imply a valuation for the company of up to 21.5 billion zlotys, putting it among the biggest Polish listed companies.

The sale could be a boost for the Warsaw market, which has lacked big IPOs in recent years. At the top of the range, Zabka's IPO would be Warsaw's biggest since online marketplace Allegro's IPO raised 9.2 billion zlotys in 2020.

Zabka said in its prospectus that an IPO would give it access to the Polish and international capital markets if future capital needs arise, "including, in particular, in connection with funding any potential M&A transactions".

In the IPO the Polish company's shareholders plan to offer up to 300 million shares, which are expected to start trading on Warsaw bourse on or around Oct. 17, following final pricing on Oct. 10.

Books are covered throughout the price range, with demand exceeding the full deal size, a bookrunner said on Tuesday.

Private equity fund CVC Capital Partners is expected to remain the company's biggest shareholder after the IPO, with around a 40% stake.

Zabka said it did not intend to recommend paying dividends in the medium term as it believes "the investment of the earnings will generate tangible benefits for (shareholders)".

FINANCIAL RESULTS

Established in 1998, Zabka is one of Poland's most recognisable brands with more than 10,500 stores operating under a franchise model.

In the first half of 2024 the group's revenue grew to 11.15 billion zlotys from 9.18 billion a year earlier, while net profit from continuing operations stood at 58 million zlotys compared to a 77 million loss a year before.

In 2023 the group had 356 million zlotys of net profit on 19.81 billion zlotys revenues.

The group is targeting high single-digit like-for-like sales growth in 2024 and mid to high single-digit LFL growth in the medium term, it said in the prospectus.

It also expects an improvement in adjusted net income margin in the near and medium terms, driven by lower interest payments and tax improvements.

($1 = 3.8674 zlotys)

(Reporting by Rafal Wojciech Nowak and Anna Koper; Additional reporting by Mateusz Rabiega, Anna Banacka, Adrianna Ebert; Writing by Mateusz Rabiega and Anna Koper; Editing by Louise Heavens, Mark Potter and Jan Harvey)