Disappointing IPO for Siemens Energy

  •   29/09/2020 - 09h21
  •   HARMANT Adeline

It is this Monday, September 28th that the German group Siemens carried out the listing of its Siemens Energy division on the Frankfurt stock exchange. The latter was thus valued at 16 billion euros at the end of this first session, which is an amount lower than analysts' expectations for this event. Let's look back on this first day of trading.

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Disappointing IPO for Siemens Energy
Image copyright: Flying Puffin - Flickr

A disappointing entry followed by a fall :

On Monday morning, at the opening of the first trading session of the week in Frankfurt, the shares of Siemens Energy, the division grouping together the activities of the Siemens Group, were listed on the Frankfurt Stock Exchange.the shares of Siemens Energy, the division grouping together the historical activities of the Siemens group in turbine construction but also in gas, oil, wind power and energy transmission, traded at 22.01 euros. It should also be noted that the valuation of this company amounted at the time to a total of EUR 15.9 billion, which is well below the forecasts of analysts and experts, who expected a capitalisation of between EUR 17 and 24 billion.

But that's not the worst of it. Indeed and because of the disappointment of the investors following this failed IPO, the stock lost 3% in the first hours of listing and was thus placed at the last place of the DAX index.

This listing of Siemens Energy was nevertheless eagerly awaited by the German group, which saw it as the crossing of a new stage in the structural reorganisation of the company.

 

The Siemens strategy behind the IPO :

This IPO owes nothing to chance since the German group Siemens has divested 55% of its stake in the subsidiary, which represents 399 million shares that have been distributed to its shareholders. The group also transferred 9.9% of its shares to its pension fund. The head of the group explained: "With the listing of Siemens Energy, we are taking a new step in the structural reorganization of Siemens" in an official statement.

This is not the first IPO for Siemens, but the fifth since the early 2000s. The independence of this division had moreover been announced last year and made a lot of noise given the historical aspect of this activity for the group. It was strategically decided to divert the activities from the heavy industry in which the group has its roots in order to focus on digital in the manufacturing industry which is more profitable. The aim is also, of course, to gain flexibility.

Previously, the Osram, Siemens Healthinneers, Infineon and Epcos divisions had also suffered the same fate. This new introduction was this year's biggest in Europe. It should be noted here that the activities of this new entity currently employ 91,000 people, which represents 24% of all the group's employees, with a total turnover of 28.8 billion euros for the year 2019.