Get 40% Off
These stocks are up over 10% post earnings. Did you spot the buying opportunity? Our AI did.Read how

UPDATE 1-German metals recycler Befesa's shares gain on Frankfurt debut

Published 04/11/2017, 01:27 am
Updated 04/11/2017, 01:30 am
© Reuters.  UPDATE 1-German metals recycler Befesa's shares gain on Frankfurt debut

* Shares outperform roughly flat market

* Shares priced at low end of 28-38 euro range

* Difficulty defining peer group weighed on demand - sources (Adds details, background)

By Arno Schuetze

FRANKFURT, Nov 3 (Reuters) - Shares in German metals recycling group Befesa BFSA.DE rose more than 7 percent from a low starting price on their first day of trading on Friday, effectively concluding a meagre year for initial public offerings on the Frankfurt stock exchange.

Shares in Befesa, majority-owned by private equity investor Triton, opened at the offer price of 28 euros, a price that was set at the low end of the subscription range.

Befesa's was Germany's second-largest stock market flotation this year after online takeaway food delivery group Delivery Hero DHER.DE and ahead of meal kit group HelloFresh HFGG.DE , which listed on Thursday. has seen few IPOs this year, but mainly due to a lack of readiness rather than a lack of investor appetite at a time of rising share prices, investment bankers said.

But Deutsche Boerse DB1Gn.DE is not the only exchange to suffer from a relative dearth of new listings this year. On Friday two of the London Stock Exchange 's LSE.L biggest floats planned for this year were abandoned after they failed to attract sufficient interest from investors. while only smaller deals are expected for the remainder of the year in Germany, 2018 looks more promising with some large deals looming, such as the listing of Siemens ' SIEGn.DE Healthineers unit and Deutsche Bank 's DBKGn.DE asset management arm, as well as IPOs for vehicle components suppliers Knorr and Vibracoustic and science publisher Springer Nature.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

People close to Befesa's IPO said that the difficulty of defining a peer group had weighed on investor demand.

"It's a business services company, but at the same time a metals group," one of the people said.

Befesa collects steel dust from so-called mini-mills that melt scrap to produce new steel.

While it gets fees for accepting hazardous waste, it generates up to 90 percent of sales at its steel unit by selling zinc it extracts from the steel dust to companies such as Glencore GLEN.L , Nyrstar NYR.BR or Korea Zinc 010130.KS . It has a similar, but smaller aluminium operation.

Befesa, which controls almost half of Europe's steel dust recycling market, said the IPO raised up to 461 million euros ($537 million) for Triton, assuming full take-up of an over-allotment option.

No new shares were sold. The offering, which gave the company a market capitalisation of 954 million euros, consisted only of existing shares from Triton, whose stake is dropping to 51.7 percent.

The listing gives Befesa a valuation of just below 10 times its expected core earnings. Companies offering roughly comparable activities - like Waste Connections WCN.TO , Stericycle SRCL.O , US Ecology ECOL.O , Umicore UMI.BR and Ecolab (NYSE:ECL) ECL.N - trade at 10-15 times their expected core earnings.

Befesa was listed in Spain from 1998 to 2011. Spanish group Abengoa ABG.MC bought a controlling stake in 2000 and later squeezed out minorities. It sold the company to Triton in 2013 for 850 million euros in cash, or 1.1 billion euros including debt. ($1 = 0.8591 euros)

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.