Hypo Real Estate, Germany´s first stock market listing for nearly a year, shrugged off fears of a share price collapse and performed strongly in early trading. The spin-off from HVB, the Munich-based bank, saw its shares jump 6 per cent to Ã¢âÂ¬11.93 by midday local time on their debut on the Frankfurt exchange on Monday. The listing price was towards the lower end of the Ã¢âÂ¬9-Ã¢âÂ¬15 range of expectations, with trading opening at Ã¢âÂ¬11.25.
Analysts said Munich Re´s placement of its 26 per cent stake through Goldman Sachs late last week had taken the pressure off the shares at listing, although traders said the investment bank had yet to filter the bulk of that stock into the market.
The expectation that Munich Re, which is HVB´s biggest shareholder, would sell its stake in the mortgage bank, had threatened to act as a drag on the share price.
HVB shareholders were allocated one share in Hypo Real Estate for every four they held in the bank. The spin-off was the second big part of the bank´s effort to rebuild its balance sheet and restore its core capital ratio to 7 per cent.
The first came in the summer, with the spin-off of a 25 per cent stake in subsidiary Bank Austria.
Metehan Sen, analyst at Sal Oppenheim in Frankfurt, said: 'The shares listed cheaply, at 60 per cent below book value. But this is an attractive play on real estate restructuring. Property prices have gone so low, especially in east Germany, that there is a cap on the downside. We believe fair value is around Ã¢âÂ¬15.'
Source: Financial Times