Flat Flotation

The Last Hurrah

First day of trading on the Frankfurt Stock Exchange. Source. Reuters
First day of trading on the Frankfurt Stock Exchange. Source. Reuters
  • Why it matters

    Why it matters

    The listing of German property firm TLG Immobilien shows that property companies in Europe’s largest economy are still considered a safe bet, despite lower economic growth prospects.

  • Facts

    Facts

    • German property company TLG Immobilien sold shares at €10.75 apiece, the low end of a previously set price range.
    • U.S. investor Lone Star bought the retail and office property firm for €1.1 billion in 2012.
    • Lone Start had wanted to sell part of its investments, while TLG wanted to raise money for investments.
  • Audio

    Audio

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Last week’s flotation of commercial property giant TLG Immobilien turned into something of a nail biter. In the end, the company floated on Friday, at a price of €10.75 ($13.64), which was at the bottom of the range, and the shares closed the day pretty much exactly where they began.

It could have been much worse. As late as Wednesday evening, there were suggestions that the IPO would be cancelled due to a lack of interest. Uruguayan securities dealer Mercantil Valores stepped in at the very last moment. The company, backed by some of the wealthiest families in South America, took 21 percent of the shares. German investors bought around 15 to 20 percent of the shares.

TLG Immobilien may just have got away with it, but its muted flotation is not a good omen for cable operator Tele Colombus and online classified ads group Scout 24, which are both preparing for the IPOs. It is hard to see how there can be much of an appetite for more IPOs this month or even for the rest of 2014. Bankers do not expect the stock market to stabilize this year, and concerns about the German economy, and the impact of the U.S Federal Reserve monetary policy have not yet disappeared.

Tele Columbus effectively postponed its IPO two weeks ago at the eleventh hour, as the stock market went into a tailspin. At the time, the Berlin-based company had still planned to come to the market in November, and accompany the IPO with a round of international fund raising. Sources say both plans have now been put on ice.

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