Germany’s IPO market is still vibrant, at least on the sell side

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FRANKFURT: Germany’s IPO market could hardly have got off to a worse start to the year, but that hasn’t dulled the appetite for stock-market listings -- at least among the candidates themselves.

The pipeline for initial public offerings is “robust” and stretches across several industries, said Dorothee Blessing, vice chairman of investment banking in Europe, the Middle East and Africa at JPMorgan Chase & Co. 

That’s after the value of IPOs in Germany quadrupled to 11.3 billion euros ($12.7 billion) last year, according to data compiled by Bloomberg.

“Now we will have to see if there are appropriate windows in the market to implement these plans,” said Blessing, who also runs the bank’s German business.

Blessing attributes the lack of share sales in Germany and the rest of the world to market fluctuations at the end of 2018. This year, JPMorgan expects more technology companies to stage IPOs and more businesses controlled by private-equity firms to seek listings.

Volkswagen AG last month canceled a stock sale for its Traton SE division, which could have been Europe’s biggest IPO of this year. The carmaker cited weak market conditions. 

So far, no German companies have gained a listing in 2019, according to the data, as Europe’s IPO market had the slowest start to a year since the financial crisis, even though it recently showed some signs of life.

Blessing also expects fewer large mergers and acquisitions in the country in 2019, compared to last year. 

“One must not forget that many German companies have been very active in recent years, and the deals of the past years must be digested,” she said.

One industry that could see more activity is banking. Deutsche Bank AG is in talks to merge with Commerzbank AG, and Blessing says that deal-making in the industry could gain momentum.

“We expect to see more banking consolidation across European borders over the next few years. It’s not just about economies of scale, but also business models,” she said.

Preparing for Brexit
Brexit has prompted a number of lenders to relocate London-based employees to continental European cities. As many as 5,000 jobs could be added in the coming 12 to 18 months in Frankfurt as a result of this, according to the association representing foreign banks in Germany. 

For its part, JPMorgan is geared up to add its workforce in the city if need be.

“We had no choice but to prepare for a possible hard-Brexit scenario,” Blessing said. “Here in Frankfurt, we are well prepared and have secured additional office capacity in connection with Brexit.”

Even without Brexit, Germany has always played an important role beyond M&A for JPMorgan Chase, Blessing said, citing the company’s markets divisions and global corporate banking business.

It’s not just about multinational corporations, she added. “Medium-sized businesses make up a significant proportion of our customers here in Germany, and many are global leaders in their industries.” - Bloomberg