Exclusive: Germany's RAG to scrap Evonik IPO plans: sources

Sun Jun 17, 2012 10:27am EDT
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By Matthias Inverardi and Alexander Hübner

DUESSELDORF/FRANKFURT (Reuters) - The owners of German chemical company Evonik RAGES.UL are set to scrap plans for what could have been Europe's biggest initial public offering in more than a year, four people familiar with the matter said on Sunday.

A string of share flotations across the globe have been blown off course by the volatility of financial markets in recent months, arising from fears the euro zone debt crisis will drag down economic growth.

The sources said the RAG Foundation was likely to cancel plans on Monday to float Evonik at the end of June, which would be the second time it has pulled plans for an IPO.

Earlier this month, motor sport racing company Formula One delayed a Singapore IPO worth up to $3 billion, and London luxury jeweler Graff Diamonds recently ditched its $1 billion IPO. [ID:nL4E8GU83J] [ID:nL4E8GU83J]

Investors also have been shaken by social networking site Facebook's (FB.O: Quote) recent IPO, which was marred by technical issues and over-ambitious pricing.

RAG, a state-owned trust that will bear the liabilities of Germany's wound-down coal mines, once hoped Evonik would be valued at 15 billion euros ($18.9 billion) in an IPO, after subtracting 1 billion euros in net debt, sources have said.

That valuation assumed a multiple of at least 6.5 times earnings before interest, tax, depreciation and amortization and an IPO discount of about 10 percent, which investors have made clear is more than they are willing to pay.

RAG, which owns 75 percent of Evonik, declined to comment. A spokeswoman for CVC CVC.UL, which holds the remaining 25 percent, said only that the private equity firm was in agreement with RAG in its assessment of the situation.   Continued...