Reuters: Private Equity: German IPO candidates speed up preparations - sources

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German IPO candidates speed up preparations - sources Mar 29th 2012, 10:49 Thu Mar 29, 2012 6:49am EDT * String of German companies plan second quarter IPOs * Evonik likely to raise 5 bln euros, Talanx at least 1 bln * Evonik, Kolbenschmidt add banks to work on listings * Talanx expected to appoint more advisors shortly FRANKFURT, March 29 (Reuters) - Three big German companies are speeding up preparations to go public in the second quarter as they look to take advantage of improved market conditions after months of inactivity in European new listings, sources close to the transactions said. Industrial conglomerate Evonik, insurer Talanx , and car parts maker Kolbenschmidt-Pierburg, which is owned by defence group Rheinmetall, are readying to launch share sales as early as June, banking sources said. "The groups will use first quarter results to win over investors, which means a listing could come four weeks later," one of the bankers said. First quarter results are usually published within six weeks of the quarter's end on March 31. Martin Steinbach, head of initial public offering (IPO) services at auditing firm Ernst & Young said he expected up to 10 flotations in Germany in the second quarter. "There are plenty of candidates in the starting blocks," he said, adding that lower market volatility would help improve the valuations companies could achieve. This month saw Dutch cable company Ziggo and Swiss-based Asian outsourcing specialist DKSH raise a combined total of around $2 billion in Europe's first large IPOs since July 2011, when an intensifying euro zone debt crisis rattled stock markets and investors. While investor interest in IPOs has picked up, bankers cautioned that an external shock like a renewed deterioration in the debt crisis may scupper plans. "Some risks remain and the final decision to float will be taken on a short-term basis," one investment banker said, adding the groups will adjust the number of shares and their price to reflect market conditions. AIMING BIG Evonik is likely to be the biggest of the offerings, raising around 5 billion euros ($6.6 billion) and valuing the chemicals group at 15 billion euros, sources close to the deal said. With a flotation of this size, Evonik would become a candidate for inclusion in Germany's blue-chip DAX index. The DAX currently counts Lufthansa as its smallest member with a free float market cap of 4.9 billion euros. "At this size, all benchmark funds will have to buy Evonik shares. For Evonik it makes a lot of sense to shoot for a large IPO," said a banker who is helping to organise the launch, adding that a final decision on volume had yet to be made. The RAG Foundation, which owns 75 percent of Evonik, is set to hit the start button on the IPO on May 23, sources have said. Deutsche Bank and Goldman Sachs are organising the sale. They will be assisted by Credit Suisse, Bank of America Merrill Lynch, JP Morgan, HSBC, Barclays, Morgan Stanley, Commerzbank, Macquarie and UniCredit, financial sources said. An offering by insurer Talanx is also set to be worth at least one billion euros. The Hanover-based group is likely to sell new shares worth 700 million to 1 billion euros, while Japanese insurer Meiji Yasuda Life would exchange convertible bonds worth 300 million euros into shares, bankers said. "If demand is high, Talanx could sell additional existing shares," one banker said, adding the fine tuning depended on market conditions days before the listing. Talanx has appointed Deutsche Bank, JP Morgan and Citi to organise its listing and banks including Barclays, HSBC and UniCredit are likely to added to the team shortly, bankers said. Kolbenschmidt-Pierburg, the third large listing expected in the second quarter, was valued at around 1 billion euros when parent Rheinmetall tried to float it last autumn. The Duesseldorf-based group has mandated Deutsche Bank, Commerzbank and BofaML to run its offering, along with Barclays and UniCredit. ($1 = 0.7525 euros) (Reporting by Arno Schuetze, Alexander Hübner and Jonathan Gould; Editing by Kylie MacLellan) Link this Share this Digg this Email Reprints

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