The US owners of Senvion are dropping plans for what would have been Europe’s biggest initial public offering this year, as their German wind-turbine-maker faces market turmoil.
Centerbridge Partners had intended to raise €703mn, by listing its main, Senvion subsidiary in Frankfurt.
Senvion’s IPO would have surpassed Metro Bank ‘s March listing, in London, which raised $570m (€513.3m).
“Against the background of recent market volatility, Senvion and its shareholders, Centerbridge and Arpwood, have decided not to pursue a private placement,” Hamburg-based Senvion said in an email, adding that the company still plans to expand into new markets.
New York-based Centerbridge purchased Senvion from Indian wind-turbine-maker, Suzlon Energy, last year.
Investors, cautious of the European Central Bank’s ability to reignite an economic recovery, are shying away from equities.
While wind energy is booming in Europe, becoming the third-biggest source of electricity in the EU last year, as countries work to lower emissions, there may be a dip in demand in 2016, because of regulatory uncertainty in some states, the European Wind Energy Association has said.
Pulling the IPO is “quite a surprise, as the pricing was quite reasonable,” said Arash Roshan Zamir, equity analyst at Warburg Research, in Hamburg, after the announcement.
“There must be other factors at play, such as a more cautious outlook for IPOs and the switch to auctions for wind power from feed-in tariffs,” he said.
The company said, earlier this month, that it would sell 29.9m shares, including an over-allotment of 3.9m shares, at a price range of €20 to €23.50.
Former Schaeffler chief executive, Juergen Geissinger, took over the top slot at Senvion, Germany’s No. 2 turbine-maker (measured by installations), late last year, ahead of the planned IPO.
Germany’s wind turbine-makers recorded bumper sales in 2015, amid a global expansion of offshore projects driven by China and other Asian nations, along with the continued support of guaranteed payments from Germany, via so-called feed-in tariffs.
The introduction of auctions to replace the feed-in tariffs in the UK, the Netherlands, and Germany is set to temper near-term growth of wind power in key European markets.
Auctions with set limits for power would allow Germany to control annual growth of electricity generated by wind.
Shares of Hamburg-based Nordex, the country’s biggest turbine-maker, are down a fifth this year, narrowing their 12-month gain to 39%.
With a dampened outlook for European sales, turbine-makers like Nordex and Senvion need to look abroad, according to Warburg.
“The green movement in the US is set to accelerate further, while Germany is about to hit the brakes,” said the bank.