German post office shares put on sale by state development bank

The German public development bank KfW has began selling shares and convertible bonds in Deutsche Post, sending shares in the semi-state post office tumbling.

Kreditanstalt fuer Wiederaufbau bank (KfW), traditionally used by the government as a vehicle for privatisation, said it would raise about €2billion ($2.4 billion) from the sale of the shares and the bond issue.

A trader said the shares represented about 0.5% of Deutsche Post capital.

The state “parks” shares with KfW bank which then sells them via the open market at a later date at a higher price.

A spokesman for (KfW) said the share placement was being offered within a price range of €15.80-16.70 per share.

The sale concerned 59.9-63.3 million shares or about 0.5% of Deutsche Post, the trader said. The share placement with institutional investors would be worth about €1billion. “The other billion € will be in the form of a convertible bond,” he said.

The price of shares in Deutsche Post plunged 4.75% to €16.04 on the placement news in early trading in Frankfurt where the overall market was lower.

The bonds will have a three-year maturity and a coupon range between 0.875% and 1.375%, with an exchange premium of 30.0-35.0%.

Final pricing will be determined later Wednesday, the KfW spokesman said.

He said Deutsche Bank and Goldman Sachs were the joint lead managers.

KfW owns 48.3 percent of Deutsche Post and the German state directly owns 20%.

One dealer said that the sales of shares and issue of convertible bonds was “not good news for Deutsche Post shares”. But another said that the possibility of such sales had been in investors’ minds. “Now that it is happening, perhaps the share can recover,” he said.