Review — New share issues in Germany 2018

Going Public + hv-magazine | Special Capital Market Law 2019 | The Reference Work for Issuers | An article by Dr. Konrad Bösl of Blättchen & Partner

The overall conditions for new issues were poor in 2018. The DAX fell by almost 18% in the course of the year, with the second half of the year alone accounting for a decline of just under 14% in the face of high volatility. Nevertheless, 2018 was a good year for new issues by German standards. While Germany was still lagging behind international developments in terms of new equity issues in 2017, new issue activity in Germany was able to outperform both Europe and the rest of the world in 2018. From Dr. Konrad Bösl.

While the number of new issues fell by 21% worldwide and specifically in Europe by a good 16%, Germany was able to increase its new issues significantly over the previous year (eleven) with 17 new issues.
In contrast, the volume of new issues worldwide rose by 6%, due to a number of billion-euro issues, mainly from the technology sector. In Europe, on the other hand, the volume of new issues fell by 17%. Germany was able to more than quadruple the issue volume to EUR 11.25 billion compared with the previous year. Despite this positive development in Germany, one must not lose sight of proportionality: In the USA there were more than 200 new issues in 2018, in China including Hong Kong a good 300 despite a massive slump — in Germany just mentioned 17.

New equity issues in Germany

In 2018 there were three new issues in Germany — Siemens Healthineers, DWS and Knorr-Bremse — with an issue volume in excess of one billion euros (previous year: 0), accounting for a good 81% or EUR 9.35 billion of the total issue volume. Siemens Healthineers and Knorr-Bremse, the offered shares were the fourth and fifth largest new issues in Germany to date. Fifteen issuers chose the Prime Standard and two the Scale trading segment for listing. 14 issuers offered their shares in a bookbuilding process and three at a fixed price. Half of the issuers succeeded in placing the shares offered in the upper third of the bookbuilding range at the time of their IPO. For 14% of the issuers, the issue price was set in the middle third and for 36% of the issuers in the lower third of the bookbuilding range. These ratios roughly correspond to the figures for new issues in 2017. For the first time since June 2016, the world market leader in household appliances Qingdao Haier Co, Ltd. Haier is already listed on the Shanghai Stock Exchange, so the IPO was carried out as a secondary listing combined with a capital increase with D‑shares on the largely unknown German-Chinese stock exchange platform CEINEX (China Europe International Exchange AG), which was founded three years ago. In view of the bad experiences with IPOs of Chinese companies in Germany, the performance of this blue-chip stock from China was also poor. In total, the 17 new issues placed 623.4 million shares with investors. Of these, 398 million shares or 64% (previous year also 64%) came from a capital increase (primary shares) and 225.4 million shares or 36% from the re-placement of shares of the former owners (secondary shares). Only the three issuers with an issue volume of more than one billion shares offered 201.5 million shares exclusively from the holdings of the former owners and thus have a massive influence on the ratio of capital increase to placement. With the exception of the greenshoe, seven new issues did not involve a placement of the existing shares. All in all, the high proportion of primary shares, especially if the billion new issues are disregarded, shows that issuers use the IPO primarily to strengthen their equity base and corporate financing.