- BofA, Citigroup also among banks left with up to 25% of sale
- Investors said to balk at price sought by Schaeffler owners
Four banks including Deutsche Bank AG and HSBC Holdings Plc were stuck with as much as 25 percent of a 1.24 billion-euro ($1.41 billion) share sale in German car-parts maker Schaeffler AG after investors balked at the price, according to people familiar with the matter.
The stake will be split between Deutsche Bank, HSBC, Bank of America Corp. and Citigroup Inc., which also advised on the sale, said the people, who asked not to be named as the details aren’t public. Commissions could help offset any potential losses if the banks sell the shares at a price lower than what they bought them for, they said.
Spokesmen for Schaeffler, Deutsche Bank, HSBC, Bank of America and Citigroup declined to comment on the stakes left with the lenders.
Schaeffler’s founding family sold its remaining non-voting stake at 13.10 euros, the bottom end of its offer price range, on Monday, completing a disposal that had already been scaled back when customer Volkswagen AG became embroiled in an emissions-cheating scandal.
The share sale is part of a years-long effort by family-owned Schaeffler to climb its way out of a debt hole after a hostile takeover in 2008 of larger car-parts supplier Continental AG backfired at the height of the credit crunch. The IPO and debt cuts have been led by Chief Executive Officer Klaus Rosenfeld, the former chief financial officer of Dresdner Bank AG.
Schaeffler was probably afraid that the market would deteriorate further and went ahead with a sale even though the environment was unfavorable, Frank Schwope, a Hanover-based analyst at NordLB, said in an interview.
"The transaction was a logical step after the IPO in October 2015," according to an e-mailed statement from Schaeffler. "The intention was always to place 24.9 percent of the total share capital, and this is exactly what we did.”
Europe’s volatile market has meant that issuers that can avoid selling stock, have. In February, Sberbank PJSC sold shares in Swiss cement maker LafargeHolcim Ltd. valued at about 1.5 billion Swiss francs ($1.6 billion) to cover a margin call on a loan to Eurocement Holding AG, people familiar with the matter said at the time.
Schaeffler fell as much as 8 percent in Frankfurt Tuesday, erasing the stock’s gains since its initial public offering in October. The shares were down 7.1 percent to 12.92 euros at the close of trading in Germany.
Schaeffler cut the size of its IPO by more than half and priced near the bottom of the range. The company had initially planned to raise as much as 3 billion euros, people familiar with the matter had said. The sale eventually raised about 938 million euros.