Hochtief likely to drop Concessions IPO: sources

FRANKFURT/LONDON (Reuters) - Builder Hochtief (HOTG.DE) looked set to cancel the flotation of its Hochtief Concessions (HCOG.BE) unit, Germany's biggest initial public offering IPO in more than two years, sources close to the deal told Reuters.

The sources said order books were not sufficiently filled as the subscription period ended at 1700 GMT.

"It's not looking good," one of the sources said.

A cancellation of the listing was "not improbable," added another source.

Hochtief had no comment.

Hochtief had planned to take in up to 1 billion euros ($1.51 billion) by selling new and existing shares and floating 49 percent in the unit.

Sources close to the deal had earlier pointed to resistance to the pricing of the IPO, saying that investors were signing up for shares near the bottom end of the 24-29 euro per share range set by Hochtief.

Several analysts said Hochtief Concessions was difficult to value as most of its investments were in minority stakes, many in companies whose results have been volatile.

"I think that gaining the confidence of investors for their highly complicated business has been a hard task for (Hochtief) management," said Arne Menzel, analyst at LBBW.

A Frankfurt-based analyst who did not want to be named said the group's stake in the Budapest airport was one of the holdings most difficult to evaluate.

"There aren't any good forecasts for the airport, projected traffic figures and the like ... The future of the airport will depend on the growth outlook for eastern Europe, which looks muted at the moment," the analyst said.

In addition to a 37.25 percent stake in the Budapest airport, the unit also holds stakes in several construction projects and smaller real estate management operations.

The timing of the IPO was also not helpful, bankers said. Many institutional investors have largely closed their books for the year.

HARD LINE ON PRICE

Bookrunners on the deal included Goldman Sachs, Citigroup, Deutsche Bank and Barclays.

Hochtief had refused to lower the price for its IPO and CEO Herbert Luetkestratkoetter had reserved the right to put the listing on hold should he not be satisfied with the pricing.

At the end of June, Hochtief said the total net worth of the unit was around 1.54 billion euros. Its price range for the IPO valued the company at 1.8-2.05 billion euros.

Hochtief's price range implied a 6-22 percent discount to the company's June net asset value (NAV).

Credit Suisse analysts Ur-cheng Leong and Robert Crimes pointed out in a note to clients that the few quoted infrastructure peers who publish NAVs -- including Macquarie Infrastructure Group MIG.AX, MAp Airport, Australia Infrastructure Fund (AIX) and Cintra CCIT.MC -- trade at a much heftier 28-47 percent discount to their NAV.

PPR (PRTP.PA) subsidiary CFAO (CFAO.PA), which became France's biggest public share offering in two years on Thursday, lowered its price guidance to 25-26.5 euros a share -- below the mid-point of an indicated range of 24.8-29 euros a day ahead of the book close. <ID:[nGEE5B10KU>

Germany's second-largest IPO in 2009 is now likely to come on December 9, when wind and solar park developer Scan Energy 18SE.DE launches a listing it said should generate gross proceeds of 158 million to 228 million euros.

The company was more flexible on its pricing and narrowed the price range for its deal by 24 percent at the mid-point.

(Reporting by Tyler Sitte, Kerstin Leitel and Alexander Huebner in Frankfurt, Daisy Ku in London and Matthias Inverardi in Duesseldorf, editing by Will Waterman)