Germany's Schaeffler rises in market debut

Fri Oct 9, 2015 5:15am EDT
 
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By Arno Schuetze

FRANKFURT (Reuters) - Shares in car parts maker Schaeffler SHA_p.DE rose 8 percent in their market debut on Friday as investors bet on a recovery of automotive stocks in the wake of carmaker Volkswagen's (VOWG_p.DE: Quote) emissions scandal.

The rise is a positive sign for the Schaeffler family, one of Germany's wealthiest, after it had to push back and scale down the initial public offering (IPO) amid volatile markets and the scandal at VW, which accounts for more than 10 percent of group sales.

The flotation follows the listings of plastic maker Covestro (1COV.DE: Quote) and classifieds group Scout24 (G24n.DE: Quote), which both suffered from the wobbly stock markets. Building materials maker Xella pulled its IPO earlier this week because of uncertain markets.

Schaeffler sold 75 million non-voting shares worth a total of 938 million euros ($1.06 billion) in the IPO, which is significantly below its initial plan of raising roughly 2.5 billion euros. Of those 66 million were new shares, while the rest was stock owned by the Schaeffler family.

Around 11 percent of the company, which makes ball bearings for products ranging from tools to airplanes, will be freely traded following the IPO, but the Schaeffler family plans to place additional shares after a six-month lock-up period to bring that figure up to 25 percent.

"We want to grow further, expand the company and we have some ideas," Maria-Elisabeth Schaeffler-Thumann, shareholder and deputy chair of Schaeffler's supervisory board, said after ringing the bell on the trading floor.

The shares opened at 13.50 euros ($15.29) and hovered around that level by mid-morning, above the issue price of 12.50 euros apiece.

Schaeffler trades at 6 times its expected core earnings, slightly below rival Continental's (CONG.DE: Quote) multiple of 6.4 but above the peer average of 5 of European auto suppliers. Schaeffler will use proceeds from the IPO to reduce its debt, which stands at roughly 10 billion euros. The company had almost bankrupted itself with an ill-timed acquisition of Continental in 2008 and has spent the last seven years restructuring its finances while initial plans for an operational tie-up with Continental never panned out. Schaeffler, still owns 46 percent of Continental's shares, which have recovered to trade at more than 200 euros compared to a low of 10 euros shortly after the takeover.($1 = 0.8835 euros)

(additional reporting by Maria Sheahan and Alexander Hübner; Editing by Kirsti Knolle and Jane Merriman)

 
Ball bearings are pictured at the booth of German company Schaeffler during preparations at the Hanover industrial fair in Hanover April 7, 2013.  REUTERS/Fabian Bimmer