May 25, 2012 / 6:05 AM / 8 years ago

UPDATE 3-Germany's Evonik to brave jittery IPO market

* First trading day in Frankfurt seen before summer break

* RAG foundation, CVC to reduce stakes

* Sources have said firm could raise up to 5 bln euros

* Not clear what stake will be offered

By Matthias Inverardi and Ludwig Burger

FRANKFURT, May 25 (Reuters) - German chemicals firm Evonik is pressing ahead with plans to list in Frankfurt, unfazed by the euro zone debt crisis and the debacle over Facebook’s market debut, in what could be Europe’s largest initial public offering in more than a year.

Sources close to the matter have told Reuters that Evonik could seek to raise as much as 5 billion euros ($6.3 billion) for owners the RAG foundation and private equity firm CVC, which would be the biggest IPO in Europe since commodities trader Glencore’s $10 billion flotation in May 2011.

The listing, which the sources said could take place on June 25, is an audacious move, with new Greek elections slated for June 17 raising questions about the country’s future within the euro and the stability of the whole currency bloc.

RAG, a state-owned trust that will bear the liabilities of Germany’s wound-down coal mines, had earlier this week signalled a possible delay of the IPO due to market turmoil.

Europe has seen little significant IPO activity since the middle of last year. While the IPOs of Ziggo and DKSH found strong support in March, the jury is still out on whether others such as Rheinmetall’s auto parts unit and German insurer Talanx will go public this year as planned.

On Thursday, Georgia postponed a planned London IPO of its state railways monopoly due to volatile markets, and a plunge in the value of Facebook shares following its New York debut last week has not helped investor confidence.

“The market environment for deals has become more difficult and volatile, but deals are still possible for quality companies,” said Stefan Weiner, a capital markets banker at J.P. Morgan.

RAG and CVC said on Friday the first day of trading for Evonik, which makes battery chemicals, animal feed additives, acrylic glass and superabsorbents for diapers, was expected to be before “the summer break,” without giving further details.

Sources close to the deal said an offer price range could be published around June 10 and the owners were aiming for Evonik to join Germany’s blue-chip index DAX in the long term.

RAG owns 75 percent of Evonik while CVC owns 25 percent.

The owners said, however, that CVC would receive one third of the proceeds from the float with RAG taking the rest. CVC’s stake in the group will therefore decline somewhat relative to RAG’s. The IPO will not include any newly issued shares.

“The company is extremely well prepared for the planned stock exchange listing,” RAG boss Wilhelm Bonse-Geuking said.

Deutsche Bank and Goldman Sachs will be joint global coordinators and joint bookrunners for the offering. BofA Merrill Lynch, Credit Suisse and J.P. Morgan are mandated as additional joint bookrunners. The IPO advisor for RAG-Stiftung, CVC and Evonik is Lilja & Co.

The RAG foundation said as early as April last year it was preparing for an IPO but put the plans on ice in September in view of weak financial markets at the time.

Sources close to the matter have told Reuters that the owners hope the IPO would value the entire chemicals group at 15 billion euros, after subtracting 1 billion in net debt, but it remained unclear how big of a stake would be floated.

Previously, roughly one third of the group’s outstanding shares were expected to be sold.

Sources close to RAG said on Thursday, though, that the trust was still debating what percentage should be offered, with one person saying as little as 10 percent was an option even though investment bankers have warned that would deter many institutional investors.

The overall price tag of 15 billion euros assumes a multiple of at least 6.5 times earnings before interest, tax, depreciation and amortization, which before special items was 2.7 billion euros in the 12 months through March.

An IPO discount of at least 10 percent to account for the large number of shares being issued will also have to be included in the calculation.

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