Evonik owner RAG drops IPO plans amid weak support
19 Jun 2012
The owners of German chemical company Evonik have dropped plans for what could have been Europe's biggest initial public offering (IPO) in a year and said it would reconsider listing if markets recovered.
A number of floatations across the globe have grievously suffered in the volatility of financial markets in recent months, as investors steered clear of risky bets while the euro zone crisis cast a shadow over global growth prospects.
"Many big investors indicated their willingness to invest in Evonik in talks last week, but due to the high level of uncertainty in the markets, especially over the further development of the euro zone, the price that could be reached is far from a sufficient valuation of Evonik," the RAG Foundation said in a statement on today.
RAG owns 75 per cent of Evonik, which manufactures battery chemicals, animal feed additives, acrylic glass and super-absorbents for diapers. The remaining 25 per cent is held by private equity firm CVC.
Reuters yestrday reported that RAG's board of trustees was set to decide against an IPO, following a meeting with bankers on Friday in which commitment to the IPO from investors was found to be insufficient.
Reuters quoted an unnamed investment banker who was involved in the IPO preparations as saying that the banks promised too much, creating expectations that were too high.
