The DB part-privatisation delayed because of the financial crisis

Posted on October 27, 2008 by Matthieu Desiderio

Deutsche Bahn privatisation delayed to February 2009

On October 9, due to the worldwide financial crisis, the German Government postponed the on-going Deutsche Bahn privatisation process. Another attempt (still with the unchanged amount of 24.9% of the DB capital to be privatised) will be held starting in February 2009. This announcement was made by the Initial Public Offer commission which gathers members of banks, the DB and the German Government.

Some might say that given the late estimations of amounts that the privatisation would generate, this decision was the only sensible one. As a reminder, the DB part-privatisation was initially expected to yield between €4 and €5 billions, which would probably not have been possible at this time.

Privatising less to start the process?

Nonetheless, another option does exist and would consist in decreasing amount of the DB capital to be privatised in order not to delay a long way off. This would presumably increase the amount of the subscription.

Despite this announcement, Hartmut Mehdorn, Deutsche Bahn Chief Executive, and his Chief Financial Officer have kept prospecting, and thus recently met in London and Moscow potential investors that they said were not directly impacted by the current crisis. Moreover, Mr. Mehdorn would be thinking of selling over shares in lots. This option would be specifically considered for key investors such as the Russian rail company, Middle East investors and Asian State funds. The Minister of Finance, Peer Steinbrück, already showed his scepticism regarding this solution, since incomes generated could possibly be too low. However this will be examined all the same, as both the Government and the DB are keen to sort this privatisation issue out as soon as possible.

Besides, the Government would like to avoid having a DB privatisation being held during Summer 2009, only few months before the elections in the Bundestag.

Technically speaking, if the privatisation occurs mid-February 2009, then the current facts and figures could be still legally used. However, if not, the privatisation would have to back up on facts and figures of the year 2008, which will only be available from late March 2009. As a result, the privatisation would not approximately be possible before mid-April.

References

Article: L’entrée en bourse de la DB est reportée au mois de février au plus tôt, Financial Times Deutschland, Oct. 10, 2008
Article: La DB examine la possibilité de vendre directement des paquets d’actions à des gros investisseurs, Frankfurter Rundschau, Oct. 14, 2008

Share on Facebook