Postbank listing sets stagefor more state asset sales
23 June 2004 , BERLIN - Billed as one of Europe's largest share market listings this year, the stock market debut Wednesday of Germany's Postbank AG could set the stage for a string of more big state selloffs in the country. As trading commenced in Postbank's EUR 1.55 billion flotation, the German cabinet signed off on a new budget Wednesday which includes plans for divesting up to EUR 15.4 billion in state assets in a bid to knock Berlin's public finances into shape so as to meet the strict fiscal targets
23 June 2004
BERLIN - Billed as one of Europe's largest share market listings this year, the stock market debut Wednesday of Germany's Postbank AG could set the stage for a string of more big state selloffs in the country.
As trading commenced in Postbank's EUR 1.55 billion flotation, the German cabinet signed off on a new budget Wednesday which includes plans for divesting up to EUR 15.4 billion in state assets in a bid to knock Berlin's public finances into shape so as to meet the strict fiscal targets for euro member states.
In particular, this is expected to include a move by the government to dispose of its remaining stakes in the giant phone group Deutsche Telekom AG and postal and express mail services group Deutsche Post AG by the end of 2006 with the bulk of the two holdings to be sold off next year.
But after a less than the smooth run-up to its stock market debut, Postbank's flotation began Wednesday on a somewhat cautious note with shares in Germany's biggest retail bank trading marginally above their EUR 29 issue price.
Postbank's stock market debut was to have taken place on Monday. However, a hostile reaction from investors and analysts to the initial stock price set by the group's parent, Bonn-based Deutsche Post, resulted in the flotation being delayed until yesterday and the book building price being cut by 10 percent.
After Deutsche Post set an issue price of EUR 28.50 on the evening before trading commenced, Postbank shares at first climbed by 1.8 percent to EUR 29. But by mid afternoon the shares were trading at about EUR 28.94.
However Deutsche Post chief Klaus Zumwinkel expressed satisfaction with the Postbank's entry onto the stock market. "That gives us hope," he said.
But then the EUR 28.50 issue unveiled by Deutsche Post was at the low end of the new book-building price range for shares of between EUR 28 and EUR 32, which was set on the weekend. This compares to the original price range of between EUR 31.50 and EUR 36.50 announced earlier this month.
That said, however and despite the current skittish state of Europe's equity markets, companies still appear to be lining up with plans to launch IPO's.
Just 24 hours before the Postbank launch, France Telecom SA unveiled the book building price for the flotation next month of its phone directory unit, Pages Jaunes (A-Z Listings).
But Postbank's own push to a stock market listing was anything but smooth.
Apart from a fight between Deutsche Post and analysts over the issue price, the plans for the listing were hit by series of mishaps including the embarrassing leaking of an internal memo drawn up by the offering's lead investment bank, Deutsche Bank, which claimed that Postbank was worth up to 25 percent less than the price tag Deutsche Post had placed on it.
In the end, however, investors appeared unperturbed by Postbank's troubles with Deutsche Post saying that the issue was more than twice times oversubscribed. Only two-thirds of the 49.9 per cent stake Deutsche Post had originally planned to sell off went up for sale.
Even after the new price range of EUR 28 and EUR 32 was announced on the weekend, fund managers are understood to have told Deutsche Post that they would be interested in buying shares at between EUR 28 and EUR 29 which is the lower end of the price range.
In the build-up to the Postbank flotation shares in the group were trading on the unofficial grey market at about EUR 29.
Deutsche Post, which will continue to hold majority control of the bank, hopes to use the proceeds of the sale to roll back debt and fund an expansion drive in Europe.
Two thirds of the 82 million shares in Postbank are being sold to the public with the remainder part of an exchangeable bond. While institutional investors grabbed the lion's share of the issue small investors also moved in, picking up about 20 percent.
As a result, this has helped to raise hopes that the Postbank issue might give fresh momentum to Europe's initial public offering business and to breathe new life into Germany's dormant share-buying culture which has suffered in recent years as a result of global equity markets turbulence.
After a drought of two years only two companies have so far this year dared to mount public offerings in Germany with three companies pulling out of their listings and postponing them until later in the year in the hope of more favourable market conditions.
Indeed, the Postbank stock market launch is the biggest German IPO since Deutsche Post's own stock market listing in November 2000.
Subject: German news