It has been a mixed year for German IPOs so far. Within a month of Siemens floating its former health sciences division, Healthineers, its stock showed a healthy 16 percent increase. But the stock debut of Deutsche Bank’s former fund management division DWS was underwhelming, as were launches by Instone Real Estate and drug company Dermapharm.
So you could say that Springer Nature is taking a risk. The science publishing giant indicated on Thursday that it will float on the Frankfurt exchange by the end of the year, possibly as soon as May. The company wants to raise €1.2 billion ($1.5 billion) in new capital to reduce its debt burden, estimated at €2–3 billion. The company is currently co-owned by Holtzbrinck Publishing Group, or HPG, a similarly named but separate entity to Handelsblatt's parent, and private equity investor BC Partners. HPG, which has a small majority of shares, intends to maintain its long-term investment in the publishers.
Springer Nature was formed in 2015 through the merger of BC Partner's Springer Science and Business Media with HPG's Macmillan Science and Education. Headquartered in Berlin, the firm is the world’s largest publisher of English-language scientific and scholarly works, and the world leader in open access publishing.
Springer Nature published 13,000 books and more than 300,000 scientific articles in 2017.
Last year, the company published 13,000 books and more than 300,000 scientific articles. Two million readers visit its online platforms every day. Ulrich Vest, the company’s CFO, said comparable listed firms include publishing group Relx, formerly Reed Elsevier, and Informa, which owns academic publishers Taylor & Francis.
Springer Nature revenues grew 2.5 percent to €1.64 billion last year. Adjusted group profits fell slightly to €374 million, with operating profit margins of 22.9 percent. Around 71 percent of revenue came from its science and research publishing division, which includes leading journals such as Nature. As of this week, the company will reorganize its legal status, giving it greater leeway to raise further funds in future. To ease the path of the IPO, management plans a generous dividend policy: €110 million this year, and thereafter 50 percent of annual profits. The share sale will be led by American banks JP Morgan und Morgan Stanley.
Also on Thursday came news of another flotation, albeit much smaller: telecoms provider Nfon plans to float this year, hoping to raise €50 million. The Munich-based company currently has around 25 percent market share of cloud-based business telephone systems in Germany. Annual revenues last year were €35.7 million, with profit margins of 0.5 percent.
Consultants EY predict a further wave of flotations on the German markets this year. Martin Steinbach, EY’s head of IPOs, told Handelsblatt that further IPOs were almost certain in 2018, with as many as 18 over the course of this year.
Peter Köhler is a Handelsblatt editor in Frankfurt, reporting on banks, private equity firms, venture capital and corporate funding. To contact the author: [email protected]