UpdateCorrected: Evonik IPO by 2013 say new partners

04 June 2008 11:44  [Source: ICIS news]

Correction: In the ICIS news story headlined "Evonik IPO by 2013 say new partners", please read in the thirteenth paragraph ...CVC's interests in chemicals sector companies have included... instead of ...CVC has interests in chemicals sectors companies including.... A corrected story follows. 

RAG and CVC aim to launch an Evonik IPO by 2013LONDON (ICIS news)--RAG and CVC aim to launch an Evonik IPO by 2013, within a legally required period but depending on market conditions, CVC said on Wednesday.

The private equity group agreed late on Tuesday to pay €2.4bn ($3.75bn) to the RAG Foundation for a 25% stake in chemicals, energy and real estate firm Evonik.

CVC Capital Partners will have two seats on the 20 seat Evonik supervisory board, a CVC spokeswoman said, and would not be involved in day-to-day management of the group.

One of the reasons CVC had won the race with other private equity groups to acquire an Evonik stake had been its past success in managing minority positions in the past, she suggested.

CVC has agreed with RAG and Evonik, however, on a “common road map” for Evonik and will help prepare the company for an IPO.

An Evonik IPO had been planned for this year but was postponed given current nervousness in the capital markets amidst the global credit crunch.

CVC beat other private equity groups which, according to press reports included Bain Capital, Blackstone Group and Kohlberg Kravis Roberts & Co (KKR) to acquire its Evonik stake.

Evonik comprises largely the former Degussa specialty chemicals business which has continued to perform strongly in 2008 despite pressures on the sector.

The RAG Foundation, having sold a minority stake in Evonik has taken the first step in its mandate to establish a capital reserve to finance the perpetual burdens of the German coal-mining industry, CVC said.

RAG has been Evonik’s sole shareholder to date.

“There were several arguments in favour of CVC as a purchaser, CEO of the RAG Foundation, Wilhelm Bonse-Geuking, said.

“CVC has extensive industry experience in the chemical and energy sectors coupled with a highly experienced team in Germany. We share a common view with regard to the development potential in Evonik Industries and CVC has a strong track record in the management of IPOs across a number of its portfolio companies.”

CVC's interests in chemicals sector companies have included Taminco, Accordis, Adisseo, Flint Group, Provimi, Brunner Mond and Victrex and in the energy sector groups such as Inalta in Spain, and Elster and Ista International in Germany.

“Evonik is an outstanding company with enormous potential for the future.” managing partner of CVC Capital Partners, Steve Koltes, said.

First quarter 2008 EBIT (earnings before interest and tax) were up 12% at €447m on sales up 11% at €3.9bn. Chemicals top line growth in the quarter of 12% was driven by prices and volumes.

RAG had said that placing a shareholding with a third party investor would make Evonik more attractive prior to the IPO.

“We would only place shares with an investor at a far higher price than could be obtained if we were to place the first tranche on the market though an IPO,” according to a statement on the Evonik website.

“That would be a strong sign of confidence in the performance of Evonik’s portfolio,” it adds.

Proceeds from the IPO will be used by the Foundation to pay for coal mining liabilities that are expected to continue for an indefinite period.

CVC has agreed to hold its stake in Evonik for a minimum period of three years but on average it has held investments in Germany for six.

It has agreed financing on the deal with eight banks.

($1 = €0.65)


By: Nigel Davis
+44 20 8652 3214



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