Deutsche Post sets ambitious shares price range for PostBank
Deutsche Post has set an ambitious subscription price range of Euros 31.50-Euros 36.50 for shares in its retail banking unit Postbank, the biggest German initial public offering for more than three years.
The price range, agreed between Deutsche Post and its bankers Deutsche Bank and Morgan Stanley late yesterday, values Germany’s biggest retail bank at between Euros 5.2bn (Dollars 6.4bn) and Euros 5.9bn – well above most fund managers’ estimates.
But Klaus Zumwinkel, Deutsche Post chief executive, said he was confident the mail and logistics group “had found the right price range” for Postbank, which he called a “solid growth-oriented investment”.
“We have talked to more than 500 investors . .. these are hard facts,” said a Deutsche Post spokesman. “We have a good feeling about this . .. the market had been trying to push the price down.”
A senior banker in the 19-bank IPO consortium said: “We are quite comfortable with the pricing.”
Analysts and fund managers had put a lower price tag on the whole bank, of Euros 4.5bn to Euros 5bn, and had expected Deutsche Post to reduce its price expectations to ensure the success of the IPO.
Postbank’s value came under pressure last month when a leaked memo from Deutsche Bank, one of the global co-ordinators of the IPO, valued it at between Euros 4.4bn and Euros 5.3bn.
The memo to an investor had been expected to spoil Deutsche Post’s chances of selling Postbank for the Euros 6bn it was hoping for. Postbank is valued in Deutsche Post’s books at around Euros 4.8bn.
Analysts said the wide price range could still allow for a favourable valuation. “I expect it to be priced at the lower end,” said one.
But fund managers seeking a bargain are unlikely to find the offer as attractive as they had once hoped. Many are sceptical about Postbank’s potential for growth in the fragmented German market.
Postbank posted net profits of Euros 352m in 2003 and has said it expected to increase earnings in 2004.
Bankers said the ambitious pricing, which showed Deutsche Post had won the battle with its bankers, had raised a question mark over the offer’s success.
A successful offer is needed to boost fragile confidence in Germany’s financial markets.
Deutsche Post intends to sell 50 per cent minus one share of Postbank. The subscription period starts today and will run until June 18.
The final price will be set on June 19-20 and the shares will start trading on June 21.
