Hapag-Lloyd Seeks $500 Million From IPO Targeted for 2015

  • Tourism operator TUI plans sale of stock from its 14% holding
  • Analyst sees IPO window open after Hapag's first-half profit

Hapag-Lloyd AG, Germany’s biggest shipping line, is seeking to raise $500 million from the sale of new shares this year as it presses ahead with an initial public offering even as the Chinese economic slowdown and a rout in Volkswagen AG shares sparked turmoil on stock markets.

The container carrier expects to collect about $400 million from institutional and retail investors, Hapag-Lloyd said in a statement Monday. Two of its largest owners, billionaire Klaus-Michael Kuehne and Valparaiso, Chile-based Cia. Sud Americana de Vapores, have agreed to place extra orders for a total of $100 million in stock, while German tourism operator TUI AG will sell an unspecified part of its 14 percent holding.

The Hamburg-based company merged last year with CSAV’s container-shipping operations to create what was then the world’s fourth-largest cargo line by capacity. In recent weeks, Hapag-Lloyd has fallen to fifth place after being overtaken by Taiwanese shipper Evergreen Line, according to trade publication Alphaliner.

“While the industry environment remains challenging, we see Hapag-Lloyd well on track for an IPO as the synergy effects from the CSAV merger are higher than initially expected and it recorded a profit in the first two quarters of the year,” Thomas Wybierek, a shipping analyst at NordLB, said by phone.

Accelerating Goal

Cost reductions from combining with CSAV’s business prompted Hapag-Lloyd to widen a spending-cut target by one-third in August to $400 million and accelerate the deadline for the goal by two years to 2017. Hapag-Lloyd is pushing ahead with the IPO plan after returning to profit in the first half of 2015, counting on global container shipping volume to rise an average 3 percent to 5 percent over the next five years.

Proceeds from the sale will be used “for further investments in ships and containers to further strengthen its capital structure, long-term growth and profitability,” Hapag-Lloyd said. The stock will trade in Frankfurt on the prime standard exchange and in Hamburg on the regulated market. The company plans to pursue “strategic acquisitions or further business combinations in a consolidation-driven market environment.”

The offer will also comprise an over-allotment option, the company said, without specifying an amount. Hapag-Lloyd may sell stock as early as October, according to a person familiar with the matter.

Kuehne and CSAV have agreed to hold a stake of at least 51 percent for 10 years and to pool their voting rights. TUI, which has said it wants eventually to dispose of its entire Hapag-Lloyd stake, rose as much as 0.4 percent and was trading up 0.3 percent at 16.59 euros as of 1:30 p.m.

Sale Coordinators

Berenberg Bank, Deutsche Bank AG and Goldman Sachs Group Inc.’s international unit will manage the sale as joint global coordinators and bookrunners. Citigroup Inc., Credit Suisse Group AG, HSBC Holdings Plc and UniCredit SpA are additional joint bookrunners and DZ Bank AG, ING Groep NV and M.M. Warburg & Co. will act as co-lead managers.

Companies are forging ahead with initial share sales, though struggling with turbulence on equity markets prompted by a scandal over Volkswagen’s admission of cheating on U.S. emissions tests for years. The carmaker’s shares plunged 34 percent last week, dragging Germany’s benchmark DAX Index down 2.3 percent. Drugmaker Bayer AG is still planning a 2.5 billion-euro listing of plastics unit Covestro, while auto-parts and bearings producer Schaeffler AG aims to collect 3 billion euros in an IPO.

Hapag-Lloyd is on target to meet its 2015 profit goal of “clearly positive” adjusted earnings before interest and tax this year, though it’s “still too early” to determine profit in the second half because the annual jump in shipments from Asia to Europe for Christmas has yet to get under way, Chief Executive Officer Rolf Habben Jansen said last week in an interview.

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