Germans rush to float on wave of enthusiasm (FT)

Germany’s smaller and privately owned “old economy” companies are rushing to list on the stock market.

They have been spurred on by enthusiasm from US and German investors for the recent acquisition spree by the country’s industrial heavyweights.

Bauer, the construction company, Klöckner & Co, the steelmaker, and Demag, the crane manufacturer, are among a growing number of companies considering public listings in the coming months, according to people close to these groups.

“Like the big, listed entities, these companies have done their homework in the past few years,” banker. “They have restructured. Investors are keen to give them money to grow, just like they applauded recent takeovers.”

The deals signal the growing for public equity rather than German debt-financing. But the creeping revolution is not principally being led by the companies’ traditional owners.

The driving forces behind most of the pending initial public offerings are private equity houses or investment funds. These professional investors bought stakes in the late 1990s and want to realise a return on their investments.

US private equity house Lindsay Goldberg & Bessemer owns Klöckner, rival KKR controls Demag, while Germany’s DBAG owns part of Bauer.

Many of the companies in Germany’s blue-chip Dax index have marked the end of restructuring by spending billions on strategic acquisitions in the past year and most have been rewarded with steady share price gains.

“A year or two ago, people were defensively focusing on dividend yield to make sure investments made a minimum return,” one banker said. “Now they’re more optimistic, looking to put their money into growth.”

The bankers are so confident that some clients are preparing for market debuts during next month’s football World Cup in Germany. “Even the football fans in the market will be happy to get some diversion,” one lead manager said.

Investors’ appetite for German shares appears strong. The Deutsche Börse has seen 17 offers worth €2.7bn ($3.5bn) since January and bankers now forecast a tripling of deals by the end of the year. This compares with 25 public offers totalling €4.1bn in 2005.

Bankers are confident these listings will be a success even though investors have proved picky. Shares in Air Berlin, the budget airline, fell following their market debut last week. www.ft.com/ipo