Biggest IPO in Europe Pulled as Market Swoon Curbs Wind Interest

  • German wind-turbine maker listing faces market volatility
  • Senvion says IPO withdrawal secondary to growth strategy

The U.S. owners of Senvion GmbH said they’re dropping plans for what would have been Europe’s biggest initial public offering this year as their German wind-turbine maker faces market turmoil.

Centerbridge Partners’s Senvion Group had intended to raise as much as 703 million euros ($780 million) by listing its main Senvion GmbH subsidiary in Frankfurt. Senvion’s IPO would have surpassed Metro Bank Plc’s March listing in London that raised about $570 million, according to data compiled by Bloomberg.

“Against the background of recent market volatility, Senvion S.A. and its shareholders Centerbridge and Arpwood have decided not to pursue a private placement,” Hamburg-based Senvion said in an e-mail, adding that the company still plans to expand into new markets. New York-based Centerbridge completed its purchase of Senvion from Indian wind turbine maker Suzlon Energy Ltd. last year. 

Investors, cautious of the European Central Bank’s ability to reignite an economic recovery, are shying away from equities. While wind energy is booming in Europe, becoming the third-biggest source of electricity in the European Union last year as countries work to lower emissions, there may be a dip in demand in 2016 because of regulatory uncertainty in some states, the European Wind Energy Association has said.

Factors at Play

Pulling the IPO is “quite a surprise as the pricing was quite reasonable,” said Arash Roshan Zamir, equity analyst at Warburg Research in Hamburg, in a telephone interview after the announcement. “There must be other factors at play such as a more cautious outlook for IPOs and the switch to auctions for wind power from feed-in tariffs.”

The company said on March 7 it would sell 29.9 million shares, including an over-allotment of 3.9 million shares, at a price range of 20 euros to 23.50 euros. Former Schaeffler AG Chief Executive Officer Juergen Geissinger took over the top slot at Senvion, Germany’s No. 2 turbine maker by installations, late last year ahead of the planned IPO.

Germany’s wind turbine makers recorded bumper sales in 2015 amid a global expansion of offshore projects driven by China and other Asian nations, along with the continued support of guaranteed payments from Germany via so-called feed-in tariffs. 

Growth Rates

The introduction of auctions to replace the feed-in tariffs in the U.K., the Netherlands and Germany is set to temper near-term growth of wind power in key European markets. Auctions with set limits for power would allow Germany to control annual growth of electricity generated by wind, the government has said. Shares of Hamburg-based Nordex SE, the country’s biggest turbine maker, are down almost a fifth this year, narrowing their 12-month gain to 39 percent.

A dampened outlook for European sales means turbine makers like Nordex and Senvion need to look abroad for market growth, according to a Jan. 20 note from Warburg. “The green movement in the US is set to accelerate further, while Germany is about to hit the brakes,” said the bank.

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