Investors Sceptical after Derby Cycle’s Debut on Stock Market
Derby Cycle was the first Germany company going public in two years. Therefore financial analysts carefully watched the company’s first trading day at the Frankfurter stock exchange last Friday. The shares started trading at
FRANKFURT, Germany – Derby Cycle was the first Germany company going public in two years. Therefore financial analysts carefully watched the company’s first trading day at the Frankfurter stock exchange last Friday.
The shares started trading at € 13.29; 6 percent over the issue rate of € 12.50. It spurred Derby Cycle CEO Mathias Seidler (photo) to comment delightedly: “This is a great success for us and we are pleased that the IPO turned out so well.” But later on Friday morning the Derby share rate dipped under 13 euro and dropped even further after the weekend. The current rate is € 12.50.
This performance made many financial analysts sceptical. “Derby Cycle only managed to sell 6.09 million shares out of a total of 6.84 million which were traded for € 12.50; at the bottom end of the targeted range between € 11.50 and € 15.50”, stated a report of the German media organization ARD.
ARD also noted that the stock market was not happy with the fact that the largest part of the IPO funds went straight into the owner’s pockets. “Of the € 76 million collected, only € 18.8 million will be invested directly in Derby Cycle.” For investors this is a clear sign that the company’s owner, Finatem II does not believe in large stock exchange profits.
The statement made by Derby Cycle’s Chief Financial Officer Uwe Bögershausen that the company will not pay any dividend over the first trading year also made many investors reluctant to buy Derby shares. “These share are meant for investors with patience”, concluded the magazine GoingPublic.
“Demografic development and environmental issues are turning bicycles into a trend product. Derby Cycle is looking back at lucrative years, but it is doubtful if they will be able to maintain this level of profitability. The price of Derby’s shares will not go sky high as, like in the whole bicycle sector, the margins are too small and the industry is too fragmented.”