German shipping line Hapag-Lloyd has slashed expected gross proceeds for an initial public offering (IPO) by 40% to US$300m from the US$500m announced on September 29 amid current stock market volatility.
The company, whose offer will start on October 15 and end on October 27, 2015, is expecting to receive US$240m from the sale of newly issued shares to investors and US$30m each from core shareholders Kühne Maritime and Compañía Sud Americana de Vapores (CSAV).
The company announced that it has decided to move ahead with its IPO after receiving positive investor feedback since the announcement of its plans.
The shipping line said: “Management and shareholders have decided to resize the offering volume to a level that enables Hapag-Lloyd’s future investment targets.
“The expected gross proceeds of approximately US$300m will allow the company to invest in vessels and containers to further strengthen its competitiveness. The cornerstone investment has also been adjusted proportionally to enable a sufficient free float.”
The carrier said in September that funds raised from the share listing on the Frankfurt and Hamburg stock exchanges will be used for “further investments in ships and containers to further strengthen its capital structure, long-term growth and profitability”.
Rolf Habben Jansen, chief executive officer of Hapag-Lloyd, said: “The access to the capital market is important for us. In the long-term, it will support our future growth through investments in our assets.
Despite challenging capital market conditions we believe this is the right step for Hapag-Lloyd, strengthening our ability to pursue our strategy focused on creating more value to our shareholders.”
A Reuters’ source reported that the shipping line has received bids for all of the shares on offer for its IPO, an important signal for potential investors even though any IPO usually needs orders twice the amount of the shares on offer to “go through smoothly”.
The German shipping company’s current fleet consists of 188 container ships with a total capacity of 1m teu, thus making it the world’s fifth largest container shipping line according to the latest figures from industry analyst Alphaliner.
The company is one of the few remaining major global carriers which has yet to invest in Ultra Large Container Vessels (ULCV).