Evonik suspends third initial public offering

EVONIK INDUSTRIES, Germany’s largest closely held chemical company, abandoned its third attempt at an initial public offering after market volatility in Europe weighed on its potential valuation.

The decision by the board of trustees at RAG-Stiftung, the foundation that owns Evonik together with private-capital company CVC Capital Partners, follows advice from its executive board to halt preparations for a share sale, RAG said yesterday in a statement.

The cancellation of the IPO, which would have been Germany’s biggest public listing in more than a decade, reflects the conditions in the market and not the company, RAG said. It said it would only resume efforts for a listing if markets recover.

Evonik has refocused on chemicals with an emphasis on health and nutrition as it reduces holdings in real estate and energy.

“While lots of big investors expressed their willingness to invest in Evonik in talks during the last few weeks, the high uncertainty in the market, especially about the development in the euro zone, means the price wouldn’t reflect an appropriate valuation,” RAG said. The maker of additives for plastics, glass and cosmetics also shelved IPO plans in 2008 and last year because market conditions deteriorated.

CVC bought a 25 per cent stake in 2008 after the first failed listing.

RAG said on June 10th that investors had shown a “very high interest” in the IPO planned in Frankfurt, though market conditions raised “growing uncertainty” a process could be seen through.

Sources told Reuters that a meeting with bankers on Friday showed insufficient commitments to the IPO from investors. “The banks promised too much. Expectations were created that were too high,” said one investment banker involved in the IPO preparations.

Deutsche Bank and Goldman Sachs led preparations for the IPO, in which RAG and CVC planned to float about 30 per cent of Evonik.

RAG-Stiftung, a body charged with the winding down of Germany’s deep-shaft coal mines, had earmarked proceeds from the share sale to pay for costs related to closing the mines, which are estimated to be about €200 million a year from 2019. – (Bloomberg/Reuters)