Deal in Focus: Scout24 dares flotation among rocky stock climate

Katharina Semke
15 October 2015

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Online marketplace Scout24 has listed with a €3.2bn market cap on the Frankfurt stock exchange, at a time when other private equity-backed companies in the DACH region are shying away. Katherina Semke reports

Scout24 began trading on the Frankfurt stock exchange on 1 October. The flotation opened at €30 per share but stock fell by €1.70 by the end of the day.

The IPO saw Scout24 raise €1.16bn in proceeds, issuing 38 million shares. A capital increase of 7.6 million shares contributed gross proceeds of €228m. Most of the earnings from the IPO will go to the company's backers. Hellman & Friedman and Blackstone held a 70% stake in Scout24 prior to the IPO. Telekom and the company's management held the remaining 30%. Following the IPO, the majority investors now hold 45.7% and Deutsche Telekom 12.1%. They have agreed on a lock-up period of six months.

Deutsche Telekom earned €400m through the IPO, selling 13.2 million shares. The German corporation will stay on Scout24's supervisory board. The flotation brings Deutsche Telekom's earnings from share sales to €2.1bn. In 2013, it sold 70% of its Scout24 assets to US-based Hellman & Friedman for €1.7bn.

The company's debt is estimated to sit at around €950m. Part of the IPO proceeds could go towards lowering leverage.

Credit Suisse and Goldman Sachs International acted as joint global coordinators and joint bookrunners. Barclays, Jefferies and Morgan Stanley were joint bookrunners.

Scout24 is a digital marketplace running two platforms, ImmobilienScout24 for real estate and AutoScout24 for cars. The business is based in Munich and was founded in 1998 by Joachim Schoss through his Beisheim Holding Schweiz. The car and real estate marketplaces were founded first, but were soon followed by FinanceScoute24, JobScout24, FriendScout24 and TravelScout24. From 2001, the company expanded to Italy and Spain.

Deutsche Telekom became sole shareholder in 2007. During its stewardship of the company it sold JobScout24. Then, in 2013, Hellman & Friedman and Blackstone acquired a majority stake in the business. With this investment, the private equity duo decided to focus on the two initial businesses and sold the other divisions. Simultaneously, Scout24 executed strategic investments with the backing of Hellman & Friedman and Blackstone, including Immobilien.net, a real estate platform, and Stuffle, an online marketplace for used items.

Rocky road
For Scout24, this latest development marks its second flotation attempt. The company announced plans for an IPO in September 2014 but had to delay the flotation for another year citing poor market conditions.

Scout24 is not the only company to have experienced a bumpy road towards an IPO. Bayer spin-off Covestro, a producer of foam ingredients for mattresses and polycarbonates for cars, delayed its flotation by a few days earlier in October. It also slashed its price range and reduced its targeted gross proceeds from €2.5bn to €1.5bn, naming the slowing economic growth in China and the federal reserves' interest rate policy as the cause.

In July, EQT-backed women's clothing company CBR delayed its planned IPO indefinitely, blaming instability of the financial markets caused by the Greek debt crisis. More recently, French music streaming service Deezer pulled its impending flotation just days before it was due to list.

While private-equity-backed IPOs have been a strong theme across the European market over the last 10 months or so, when drilling down into the actual numbers, flotations of portfolio companies have actually been somewhat subdued this year, with only 33 recorded across the continent. This is fewer than the 75 recorded by unquote" data in 2014.

And for the DACH region in particular, the IPO exit route appears to be less accessible, with only three private-equity-backed IPOs recorded so far this year. With few prospects on the horizon, it could be that performance this year matches that of 2012, when again, there were just three listings, compared with eight in 2014.