1 IBU-tec advanced materials AG was the first new issue in the Scale trading segment on the Frankfurt Stock Exchange. What advice would you give to companies considering going public — in preparation for and after the IPO?
IBU-tec’s IPO was embedded in a clear strategic framework. The question of financing had to be clarified in order to implement the agreed growth strategy. After weighing up all the pros and cons, the IPO option ultimately prevailed over traditional bank financing, private equity or bond models. In addition, it should be noted that a possible IPO was already considered in 2008, but was not carried out at the time due to the economic crisis. Nevertheless, over the years contact with the partners, including Blättchen & Partner and the ICF Bank, was always maintained. This made it possible to start the project at short notice after the basic decision had been made. It was important to us that the majority ratio and the “co-determination” by the new investors remain “calculable” for us after the intended capital increase. At the same time, we wanted to attract a certain number of strategic investors to IBU-tec in any case. To achieve this goal, we have chosen the path of an early private placement. Prior to the actual IPO, we carried out an upstream roadshow and met around 250 potential institutional investors in the German-speaking financial centres (in Germany, Austria, Switzerland and Luxembourg). This gave us marketing security prior to the initial listing and, in addition to the retail marketing volume provided for in the Scale, enabled us to achieve our goal of bringing strategic investors on board. The decision not to expand our marketing activities to international financial centres (such as London) was partly due to the fact that this would have made the project significantly more expensive and that we ultimately did not consider the added value to be adequate. In addition to the equity story, the company and the business model itself, the issue price of the share was particularly important for the strategic, institutional investors, as the previous owner family had given a clear signal for a long-term commitment to the company and documented this through corresponding lock-up periods. Investors also took a positive view of the fact that we offered shares from a capital increase and only the shares for the greenshoe came from the holdings of the previous owners, which was absolutely consistent with the goal of financing growth. Some institutional investors were critical of the size of the company and the expected low free float after the IPO, which in turn was partly reflected in the asking price. The scale was conceived by Deutsche Börse as a quality standard and thus in response to the negative experience with the “Neuer Markt”, which means that potential IPO candidates must first “qualify” for it. Compliance with the admission requirements and defined standards was then checked by the Frankfurt Stock Exchange prior to the IPO on the basis of the stock exchange prospectus. The first step that had to be implemented for us was therefore the preparation of the stock exchange prospectus. A process that was very extensive and time-consuming for a medium-sized company like IBU-tec. A core team of 3–4 people, including the administrative structures (accounting, controlling, etc.), ultimately implemented the project, whereby a high degree of discretion was necessary and was ultimately realised. It was advantageous at this point that with EY, we had an annual auditor on board for several years who has outstanding expertise in these processes. The other partners are also very important in the process and were all process proven. In our opinion, the bank accompanying the IPO should fit the size of the company. We did not consider a major international bank suitable for our IPO, for example, and did very well in retrospect with ICF Bank in Frankfurt, which specialises in smaller IPOs, among other things. Further partners are the lawyers specialising in this field of law, who play an important role both in the preparation of the prospectus and subsequently in an advisory capacity in the various “pitfalls” of stock corporation law and the Securities Trading Act. Last but not least, an IR agency is an indispensable partner both pre- and post-IPO. The number of players in this game alone shows that an IPO is a significant cost item, which, depending on the transaction volume, can amount to up to 10% of gross proceeds depending on the transaction volume and is therefore not a very favourable financing method. Regardless of this, with Blättchen & Partner we had taken on board an independent consultant to “balance” the interests during the project, if necessary. All in all, one must be aware that both the IPO itself and the “being public” involves a number of issues which, on the one hand, entail additional expenses, but which, on the other hand, also pose significant challenges to the organization of a medium-sized company. For example, the quality of internal and external accounting, which should generate reliable figures via the forecasting processes. The ongoing consultancy costs for IR, for the annual audit, for legal advice such as the holding of general meetings etc. also represent clear annual cost items in the ongoing process. In addition, the activities involved in maintaining the share price, such as participation in investor conferences, the holding of roadshows and the preparation of corporate news, tie up significant management capacity in a company of our size. Price fluctuations that have nothing to do with the company’s performance must at least be considered and accepted. Conclusion: The decision to go public should be made in a corporate strategy context. Suitable partners and sufficient resources are essential in the preparation and implementation phase. Transaction volume and type of marketing should be carefully considered. The equity story, company key figures and company goals must be presented coherently and transported “crisply”. Running costs and partly necessary adjustments in the administrative structures as well as the costs for the IPO itself are significant and must be considered in the decision. Ongoing price management is sometimes strenuous and unfortunately not always successful due to overlapping general stock market trends.
2 Last year IBU-tec acquired BNT Chemicals GmbH, a company specialising in wet chemical processes. What synergies exist with the previous business model and to what extent can IBU-tec further strengthen its customer relationships?
With the acquisition of BNT Chemicals GmbH in Bitterfeld (inorganic growth), IBU-tec has succeeded in acquiring a company which, in addition to significant expansion of its product and customer portfolio, is also expected to generate noticeable synergy effects with IBU-tec’s production site in Bitterfeld, which is currently under construction. IBU-tec has repositioned itself through this acquisition, as the service-based business model in the areas of research and development and production has been supplemented by its own products. BNT’s products in the field of organotin-metal compounds operate in a niche market and do not compete with IBU-tec’s service business. In particular, however, the acquisition of BNT Chemicals GmbH completed the chemical value chain. The drying and calcination processes at IBU-tec are seamlessly linked to the wet chemical processes for which BNT Chemicals GmbH has the core competence. We are confident that this will enable us to provide our customers with an even more attractive and complete range of services.
3 IBU-tec has strong growth in battery materials. What exactly does this mean and what contribution can IBU-tec battery materials still make to improving the batteries of electric cars?
IBU-tec operates in the market as a highly specialised development and production service provider to the industry for thermal process engineering for the treatment of inorganic powder materials and granulates. The fields of application of the treated material systems are very complex. The powders can be found in applications for automotive or chemical catalysts, in products for the building materials industry, in raw materials for the chemical industry and even in life science products. For some years now, battery materials have represented another major part of the business. A long-standing partnership with BASF, initially started as a pure development cooperation, has been established and expanded over the years up to the point of a supplier relationship for battery materials of a certain specification. The expertise acquired here over the years has also led to IBU-tec becoming an interesting partner for other players in the market. Now that the topics of e‑mobility in the context of the diesel scandal and “stationary energy storage” in connection with the expansion of renewable energies have gained considerable momentum, we have succeeded in acquiring many interesting projects in this field. The spectrum here ranges from the production of powder materials for stationary energy storage systems to development partnerships for newer, more modern battery materials that pursue the goal of lighter, more powerful and thus range-optimized battery cells. The customer base in this segment is as broad as the variety of battery materials. In addition to large, international groups, we also work on these issues with smaller start-up companies. It is important to know that IBU-tec does not manufacture batteries, but only supplies the necessary anode and cathode powders. For the development of processes and material systems, customers can rely on IBU-tec’s many years of experience in the development and production of inorganic raw materials using thermal processes in the temperature range from 200 °C to 1,550 °C. IBU-tec’s core competencies, such as laboratory analysis, materials and process engineering process development and process measurements, offer customers an extremely efficient complete range of services, which provides them with the know-how to produce the desired materials in a compact and comparatively short time.