October 12, 2018 / 7:38 AM / 7 days ago

Knorr-Bremse gains as investors get a piece of 'Made in Germany'

FRANKFURT (Reuters) - Shares in brake systems manufacturer Knorr-Bremse (KBX.DE) gained on Friday, as Germany’s second biggest stock market debut this year was helped by a respite from the recent slide in global stock markets.

The shares opened at 80.10 euros, a shade above their offer price of 80 euros, and had advanced to 81.59 euros by 0921 GMT, as automotive stocks led markets higher.

European shares hit their lowest in more than 21 months and Wall Street extended its slide into a sixth session on Thursday, as investors fear an escalating U.S.-China trade war and an economic downturn.

Proceeds from the sale of a 30 percent stake in Knorr-Bremse go to owners Heinz Hermann Thiele and his daughter, handing them 3.9 billion euros ($4.5 billion) and valuing the company at 12.9 billion euros.

Bankers who worked on the deal said it had been oversubscribed several times over, with good demand from German institutional investors, as well as in Britain, Switzerland and the United States.

“We can be very happy with the flotation, especially given the market volatility of recent days,” said Patrick Frowein of Deutsche Bank after Thiele rang the bell to start trading.

“Big institutional investors realised they are getting a piece of the ‘Made in Germany’ story - a company that embodies the strength of the German economy and industry, and that will be sustainable in the long term.”

Thiele said the initial public offering (IPO) would give Knorr-Bremse the business and financial flexibility to succeed in the future. “As the majority shareholder, I will continue to ensure continuity and stability,” he added.

SECOND-BIGGEST LISTING

Knorr-Bremse’s listing is this year’s biggest stock market flotation in Germany after Siemens Healthineers (SHLG.DE), which sold shares worth 4.2 billion euros.

Yet it comes amid a downturn in demand for trucks and cars in key markets like China and the United States, and as analysts question whether components suppliers like Continental (CONG.DE) should trade at higher multiples than carmakers.

The debut follows Westwing (WEW.DE), the home and living company backed by Germany’s Rocket Internet (RKET.DE), which listed this week in Frankfurt but has fallen below its offer price.

In other IPO news on Friday, the music arm of China’s Tencent Holdings (0700.HK) has delayed its $2 billion U.S. market float until at least November, preferring to wait until global markets stabilize, sources familiar with the matter said.

Retail investors that placed orders with syndicate banks were allocated 0.9 percent of the Knorr-Bremse offering. Each order was allocated 25 percent of its respective demand, up to a cap of 500 shares apiece, the company said.

Knorr-Bremse, which had shortened the offer period citing strong investor interest, said a so-called over-allotment option of 5.3 million shares was fully exercised, bringing the total number of shares sold to 48.4 million.

Deutsche Bank, JP Morgan and Morgan Stanley acted as joint global coordinators and bookrunners on the deal. Berenberg, Gossler, Commerzbank, UBS and UniCredit were also joint bookrunners.

($1 = 0.8618 euros)

Reporting by Edward Taylor and Douglas Busvine; Editing by Maria Sheahan and Mark Potter

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