IPOs: How Investors Can Cash in IPOs



Bells ringing for the stock market launch: Bernd Montag, CEO of Siemens Healthineers, in March at the IPO of his company on the Frankfurt Stock Exchange – even private investors can participate in the business.

The brake manufacturer Knorr-Bremse put on Friday another billion IPO this year on the German equity floor. A new highlight for investors in poker for lucrative IPOs.

  A few months ago the Siemens Healthineers division as well as the Deutsche Bank fund subsidiary DWS, this week now the brake manufacturer Knorr-Bremse – the names of prominent companies this year again draw attention to the topic of initial public offerings, which for investors of some Interest can be.

  Many an investor might still remember the turn of the millennium with a shudder when the New Market IPO weddings were a hot topic on the stock exchange. At that time, too many of the young technology companies that collected investors' money turned out to be windy money-wasters with no economic success, which is why heavy losses were ultimately incurred in many private deposits.


This is often different now. There were already more than a dozen IPOs in 2018, so that, for example, the experts of the economic consultancy EY expect that this year will be the strongest IPO year in this country since 2000. The issue volume in the first three quarters alone, at 7.6 billion euros, was already well above the previous year's total of 3.2 billion euros, according to EY.


And what is crucial: Many of the newcomers to the trading floor are from the investor quite well there. For example, Healthineers shares are still trading almost 20 percent above their March issue price, even after a sharp slump in stock market turbulence in recent weeks. Knorr-Bremse also successfully started trading and was on Friday afternoon at least with more than 2 percent in the plus.

What investors should pay attention to

  By contrast, the DWS share is now trading low in the red. The stock market flotation of the Munich-based online furniture retailer Westwing Börsen-Chart, which also took place this week, was also rather mixed. The paper is still struggling three days after the initial listing to keep at least the level of the issue price of 24 euros. However, this may at least partly be explained by the generally turbulent market environment. Possibly the Westwing executives would have done better to put their initial public offering on ice in these turbulent times, as it did a few days ago, the special plant manufacturer Exyte from Stuttgart.


For private investors, it is already difficult in advance to estimate the chances of an IPO. They often lack the necessary insights into the company situation and other important details and background information. Experts therefore sometimes recommend a pragmatic approach. "You can not study the bottom line as a private investor," says Frank Wieser, Managing Director of PMP Vermögensmanagement in Düsseldorf. "After all, you can but pay attention to two things: Why does the company to the stock market, and understand immediately the business model?"

  If it turns out, however, that an IPO takes place primarily so that the founders of a company can make cash, then investors should at least be skeptical, so Wieser.


Leave a Reply

Your email address will not be published. Required fields are marked *