By Gavin van Marle

It has been tumultuous week for Hapag-Lloyd as the German carrier pressed to push through its initial stock market listing – otherwise known as an IPO – while existing shareholders have seen the value of their stakes fall. And in the case of CSAV, the company’s largest single shareholder, this could lead to a write-down of almost 1 billion euros, according to one analyst.

With open trading of the shares set to commence on November 6, the company has had to twice lower the price range of the new issues it hopes to trade, as well as extending the initial offer period. Originally priced at 23-29 euros per share, the company downgraded that to €20-22, as a result of “ongoing market volatility”, and announced on November 3 that it had raised $300 million from placing 13.2 million shares priced at 20 euros each. Another two million “over-allotment shares” are to come from the holdings of TUI, and these are expected to raise another $45 million, taking overall capital raised from the exercise to $345 million, or 304 million euros. The cash will be used for new investment in vessels and containers, the company said.

However, Alphaliner pointed out that weak demand and the low pricing of the offer meant that the line’s existing four major shareholders – CSAV, Kuehne Maritime, TUI and the Hamburg municipality – would likely have to “revalue their investments in Hapag-Lloyd to reflect the lower market value of their shares”. Alphaliner calculated that at the beginning of June, CSAV’s 34 per cent stake had a book value of 1.66 bilion euros, which at a 20 euros per share price would need to be revalued at 713 million euros, meaning some 953 million euros had been wiped off its shareholding value.

Likewise, travel company TUI, which has been looking to exit the company for a number of years and had hoped this would be achieved through the selling its shares on the Frankfurt and Hamburg bourse, has seen its 13.9 per cent stake written down. “The stake is currently classified as “financial assets available for sale” at a value of 489 milion euros, but would only be worth 291 million euros at the lower end of the IPO offer price, implying a potential hit of some 192 milion euros for TUI,” Aphaliner said.

The looming write-down had forced TUI to withdraw 300,000 shares from the over-allotment portion, but will see an immediate loss on those that it does sell. “HGV (the city of Hamburg investment arm) and Kuhne Maritime do not reveal their current holding value of their Hapag-Lloyd shares but they are also expected to take a significant loss on the IPO,” Alphaliner concluded.

And Loadstar sources in the German shipping hub report that some city figures are have begun to ask why the flotation was not delayed until market conditions improved.

Reprinted courtesy of The Loadstar (