Evonik Readies An IPO Again

For the third time since 2008, owners of Evonik Industries are planning to sell shares of the German specialty chemical maker in an initial public offering on the Frankfurt Stock Exchange, this time by the end of June.

Owners RAG Foundation and private equity firm CVC Capital Partners have not stated publicly what percentage of the firm they will sell or how much money they intend to raise. Reports from Germany indicate that the two owners plan to sell a 25% stake in Evonik that could raise as much as $5.6 billion.

RAG, which owns 75% of Evonik, will offer two-thirds of the shares to be sold, and CVC, which owns 25%, will offer the rest.

“Despite the challenging conditions on the financial markets, we are entering the intensive phase of preparations for the planned stock exchange listing with great confidence,” says Evonik Chairman Klaus Engel. Still, RAG warned that it could postpone plans again should market conditions change.

The firm consists largely of the old Degussa hydrogen peroxide, acrylics, and specialty chemical operations. In 2011, it had sales of $20.2 billion, up 9% from the previous year. Operating earnings rose 17% to $3.9 billion. Among German chemical companies, only BASF and Bayer are larger than Evonik.

RAG originally intended to sell Evonik shares to the public in 2008. It nixed those plans because of the financial crisis and instead sold a 25% stake to CVC for $3.7 billion. RAG again arranged to sell shares to the public last year, but it shelved plans in October because of market uncertainties. Proceeds from RAG’s offering are earmarked for pensions owed to workers and costs related to RAG’s coal mines, which are largely shut down.

The credit-rating agency Standard & Poor’s gave Evonik a good bill of health last month when it increased its rating of the firm’s long-term debt to an investment grade of BBB+. In a report to investors, S&P analysts note the firm’s “higher profitability and reduced exposure to cyclical end markets compared with most of its specialty chemical peers.”