Details of what may be Europe's biggest stock market launch of a software group were revealed this week by Software AG, the German enterprise systems producer.
The initial public offering, due in the second quarter of the year, is expected to raise at least DM 1 billion (€1.95583 billion)
Software AG, set up with six employees in 1969, compared with an expected 2,350 by the end of this year, plans to use the proceeds to enter new sectors and acquire companies or licences from related business such as security software or data filters. SAP is the only other Frankfurt-listed pure technology stock.
The two trusts that comprise Software AG's current shareholders are to sell more than half of their 23 million shares. The company also plans to issue three million new shares. If there is over-subscription, the company has authority to increase the number of shares by 15 per cent.
If all the potential new shares were issued, the owners would be left with about 35 per cent of the company.
Mr Erwin Konigs, chairman, said he hoped a third of the shares would go to German investors, with "a large part" going to private investors, and a third to the US. They will be listed on the Amtlicher Handel (main market segment) of the Frankfurt exchange.
Preliminary pre-tax profits of DM87.3 million for 1998 were 35 per cent up on a year before, Software AG said. Group sales were 9 per cent up at DM626 million. Sales and profits this year should rise by "at least at 1998 levels, if not more", Mr Konigs said.
Lehman Brothers, bookrunner and global co-ordinator for the deal, said that even using conservative estimates, Software AG should achieve a p/e ratio close to the 40 to 50 of other software companies such as SAP and Oracle. Mr Christian von JagwitzBiegnitz of Lehman said the company could even have more potential, given that "its licensing business alone grew 18 per cent last year, compared with 11-12 per cent at Oracle and SAP".
The company is best known for Adabas, a high-performance database management system, and Natural, a so-called application tool. Adabas, on the market for 26 years, is used by such companies as Chase Manhattan, Dow Jones and Deutsche Lufthansa. Last year, the company introduced EntireX, which communicates between different software applications.
