(Reuters) Shares in German digital classified ads firm Scout24 dropped below their offer price on their trading debut on Thursday, casting a shadow over other pending flotations in Frankfurt, with some already scaling down their ambitions.
Scout24 shares opened at 30.75 euros, above the issue price of 30.00 euros, but later dropped below that level, as investors viewed them as overvalued relative to their peers in Europe.
The shares were down 1.8 percent at 29.45 euros by 1248 GMT, after losing as much as 2 percent, underperforming a 0.5 percent drop in Germany’s benchmark DAX index.
Scout24’s market debut is being scrutinized by investors amid jittery equities markets. Volkswagen’s emissions scandal has also scared off investors, forcing plastics group Covestro to lower the price range and the number of shares on offer after failing to win enough offers for a planned 2.5 billion euro ($2.8 bln) Frankfurt IPO.
Car parts maker Schaeffler is also considering scaling down the size of its flotation and will postpone it by at least a couple of days after investors voiced concern over the Volkswagen scandal and wobbly markets, sources familiar with that deal said.
Still, some investors remained hopeful. “It needs more to cancel other IPOs,” said a Frankfurt-based trader.
The Scout24 IPO had already been delayed from last year due to volatile equity markets, something Chief Executive Greg Ellis tried to play down on Thursday.
“This was the best time to go,” Ellis told Reuters just after the shares started trading.
The company had just completed an internal revamp and would not have been ready to float earlier this year when equity valuations were higher, he said.
The initial public offering values Scout24’s equity at 3.2 billion euros, or about 19 times its expected core earnings including debt. That compares with an average earnings multiple of 18 times for its European peers, which include Rightmove , REA Group, Zoopla and Autotrader .
After selling shares in the IPO, private equity firms Hellman & Friedman and Blackstone will own 45.7 percent in Scout24 if an overallotment option is fully exercised. German telecoms operator Deutsche Telekom will hold 12.1 percent while 35.9 percent will be widely held.
Scout24 runs Germany’s biggest digital advertising portal for real estate and the country’s No. 2 car sales portal, behind Ebay’s mobile.de.
It expects the digital classifieds market in those two sectors to roughly double by 2018.
The company aims to use the proceeds of 230 million euros from a capital increase to reduce its debt, which stood at about 950 million euros at the end of June. It has no plans to acquire peers.