Bloomberg News

Goldman Poised to Reclaim Lead in German Stock Sales

June 08, 2011

(Corrects headline of story published yesterday as Goldman Sachs is poised to become the top arranger of stock sales in Germany.)

June 7 (Bloomberg) -- Goldman Sachs Group Inc. is poised to reclaim the top spot in German equity underwriting as ties to private equity firms propel it to the fore of what may be the best year for initial public offerings in more than a decade.

The New York-based investment bank, which last led the rankings in Europe’s largest economy five years ago, has guaranteed equity offerings worth 4.5 billion euros ($6.6 billion) so far this year, data compiled by Bloomberg show. That compares with 1.7 billion euros underwritten by second-placed Deutsche Bank AG, last year’s league leader.

Planned listings of chemical makers Evonik Industries AG, owned by CVC Capital Partners Ltd., and H.C. Starck GmbH, owned by Carlyle Group and Advent International Corp., as well as Siemens AG’s Osram lighting unit are set to make 2011 the best year for German IPOs since 2000, the data show. Goldman’s long- standing relationships with private equity firms leave the bank best positioned to benefit from this year’s surge in IPO exits, said Andreas Lipkow, an equity trader at MWB Fairtrade Wertpapierhandelsbank AG in Frankfurt.

“Goldman Sachs’s relationship with private equity firms helped the brokerage get IPO business,” said Lipkow in an interview. The U.S. bank “has been very aggressive in the last few months in penetrating the advisory and equity capital market business, including in Germany.”

Samsonite

Goldman was the leading financial adviser on mergers and acquisitions involving private-equity firms worldwide in the five years through 2010, managing deals valued at $830 billion, or 34 percent of the total, according to the data. This year, it has led transactions involving private-equity firms that account for about 30 percent of the total and measure $55.3 billion in volume, the data show. That compares with a 20 percent market share for Deutsche Bank.

Goldman and Frankfurt-based Deutsche Bank were chosen as global coordinators for Evonik and Osram, which are estimated to be the biggest share sales in Germany since Infineon Technologies AG and Deutsche Post AG each raised more than 5 billion euros 11 years ago.

“The German economy is the best-performing in Europe and companies are delivering strong results, so this is an attractive place to invest,” said Christoph Stanger, who oversees IPOs as head of financing for Germany, Austria and Switzerland at Goldman. “The backlog of private equity and corporate exits is contributing to the good overall market performance.”

Taminco

CVC, which picked Goldman to jointly manage the IPO of its Samsonite LLC holding this year, is also working with the U.S. bank on a potential sale of Belgian chemical company Taminco BV, three people familiar with the matter said in April.

Goldman has also arranged leveraged loans to fund the Blackstone Group LP-led takeover of Mivisa Group, a Spanish food-can maker that was owned by CVC, and was one of the banks managing the January IPO of Nielsen Holdings BV, the television- audience rating company that was owned by KKR & Co.

Evonik’s owners may raise 5 billion euros, according to an April 28 report in Financial Times Deutschland, which cited unidentified people familiar with the transaction. Siemens’s Osram has an enterprise value of 5 billion euros to 7 billion euros, according to Morgan Stanley estimates.

“There will be a high degree of interest for both IPOs,” said Christian Stocker, senior strategist at UniCredit SpA in Munich. “We have a special story in Germany and that makes it a very attractive environment for IPOs.”

Broadening Recovery

H.C. Starck, a former unit of drugmaker Bayer AG, may fetch as much as 1 billion euros, four people familiar with the plan said last month.

Deutsche Bank spokesman Armin Niedermeier declined to comment on the equity offering ranking.

Germany’s economic recovery is broadening as companies boost investment and hiring to meet booming export demand from emerging Asia. A rebound in construction spending, surging company investment and rising exports powered Germany’s fastest growth in almost a year in the first quarter, data on May 24 showed.

Earnings estimates for companies on the benchmark DAX Index have risen an average 6.6 percent from last year, according to data compiled by Bloomberg analysts. That compares with a 23 percent drop in estimates for companies on the U.K.’s FTSE 100 and a 2 percent decline for France’s CAC 40 companies. For members of the benchmark Stoxx Europe 600 Index, estimates have fallen 7.6 percent.

DAX Gains

The DAX Index has risen 2.5 percent this year. That compares with a 1.3 percent decline for the Stoxx 600 and a 0.6 percent drop for the benchmark FTSE 100 Index.

“We have a sustainable environment for industrial companies to say the party will go on,” said Robert Halver, head of research at Baader Bank AG in Frankfurt. “The economic framework and earnings are very good. It’s the right time to do IPOs.”

There were 205 IPOs priced in Germany in the last 10 years. The largest of these was Tognum AG, a maker of industrial engines that was sold by Daimler AG for 1.8 billion euros in 2007, Bloomberg data show. Deutsche Telekom AG was the country’s biggest IPO, raising 16 billion euros in 1996, according to Deutsche Boerse AG.

Eight IPOs were priced in Germany this year, compared with five at the same time last year. German listings represent 15 percent of the total number of IPOs priced in western Europe this year. A total of 21 offerings were priced in the U.K.

“Investors see the German market as a safe haven and the overall mood is favorable for IPOs in the country,” said Markus Steinbeis, head of equity portfolio management at the Unterfoehring, Germany-based unit of Pioneer Investments KG mbH, which oversees about $221 billion globally. “Though if the global economic recovery starts slowing down, this could represent a risk to the good picture for IPOs.”

-- With assistance from Aaron Kirchfeld in Frankfurt. Editors: Angela Cullen, Andrew Rummer

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net.


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