German car parts maker Schaeffler to cut debt with IPO

Mon Sep 21, 2015 4:59am EDT
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FRANKFURT (Reuters) - German ball bearings and automotive parts maker Schaeffler AG plans to list on the Frankfurt stock exchange to restructure its finances seven years after a takeover of rival Continental (CONG.DE: Quote) almost bankrupted the family-owned group.

The Schaeffler initial public offering, scheduled for Oct. 5, could become Germany's largest listing this year, with one source familiar with the matter saying that it could raise significantly more than 2.5 billion euros ($2.8 billion).

Schaeffler plans to sell around a quarter of its stock, the company said on Monday, making it the latest arrival in an increasingly crowded initial public offering (IPO) market in Germany.

Depending on the outcome of a bookbuilding, its size could eclipse that of Bayer's (BAYGn.DE: Quote) 2.5 billion euro flotation of its plastics unit Covestro and create and a candidate for Germany's midcap index .

"This is the final step to realign refinancing, to deleverage and to open up new growth opportunities," Schaeffler Chief Executive Klaus Rosenfeld told Reuters.

Schaeffler's announcement comes after other German companies including Covestro and digital classifieds group Scout24 have unveiled listing plans. Others such as shipping group Hapag-Lloyd and construction materials group Xella are expected to follow suit.

Germany is seeing a string of listings as companies try to take advantage of robust equity markets and to lock in high valuations ahead of a potential rise in interest rates, which may lure investors towards fixed income products.

British payments processing firm Worldpay pressed ahead with its plan to raise about 890 million pounds ($1.4 billion) in a London listing last week after the U.S. Federal Reserve left rates on hold.

Despite the rush to the stock exchange, equity capital market bankers still expect there be sufficient investor appetite for IPOs.   Continued...

The headquarters of German company Schaeffler Group, the world's second largest ball-bearing maker is pictured in Herzogenaurach July 16, 2008.   REUTERS/Michaela Rehle