The drop came one day after German online retailer Zalando SE listed in Frankfurt without posting a gain. Zalando shares fell 12% on Thursday while the broader DAX shed 2%. The falls mark a sharp turnaround for companies that until just days ago appeared set for robust listings. Shares of both had risen well above their offer prices in unofficial trading before their listings. Both fell back as their listings approached. Rockets IPO was the largest German tech IPO in the past decade.The company sold its shares at the top end of its initial public offering price range, €42.50 ($53.65), valuing Rocket at €6.7 billion. The shares closed Thursday at €37. Oliver Samwer, Rockets chief executive and founder, remained optimistic despite the early decline. Our company isnt interested in the first price, Mr. Samwer said in an interview with broadcaster N-TV. Were oriented for the long term. The company said it raised gross proceeds of €1.6 billion from the IPO, issuing 37.9 million new shares, including 4.9 million from an overallotment option due to the strong demand. The issue was oversubscribed at least 10 times and none of the existing shareholders sold any of their shares, according to the company. One Frankfurt-based investor blamed the fall on overall market sentiment, which this week turned sour amid slides in U.S. and European indexes and expectations the European Central Bank would announce more steps to tackle low growth in Europe on Thursday. While Rockets lackluster start casts a cloud over what had been Germanys most hyped IPO of the year, many investors remain optimistic about Germanys increasing willingness to bet on online businesses. I think its a good thing that German investors are taking a serious look at the business models of companies like Rocket and Zalando, said Michael Muders of Union Invest, which took a position in Zalando this week. Some may think this is like the bubble in the late 90s, but theres a more credible long-term perspective here. Other investors noted that the companies had achieved their funding goals. Both IPOs worked fantastically and raised the necessary capital needed to grow, said Christian Reitberger of venture-capital firm Wellington Partners. Rockets share price was most likely stabilized by the investment banks who helped launch the IPO, market observers said. According to Rockets IPO prospectus, a stabilization measure was agreed to by the lead banks, which included Berenberg Bank, J.P. Morgan JPM -0.89% and Morgan Stanley.
Posted on: Fri, 03 Oct 2014 07:46:08 +0000