Spain’s Cepsa IPO on hold amid market turmoil

Tom Brown

15-Oct-2018

LONDON (ICIS)–Cepsa’s planned initial public offering (IPO) has been delayed less than a month after the announcement of the listing as a result of deteriorating market conditions, the Spain-headquartered energy and petrochemicals major said on Monday.

Abu Dhabi’s sovereign fund Mubadala, which controls the company, announced plans to raise €1.75bn-2bn by floating 25% of the energy major in a domestic stock exchange in an IPO.

However, institutional investor appetite has dwindled as a result of geopolitical tensions and recent stock market shocks, with the extent of the downturn meaning that Cepsa’s valuation would likely be hit.

The IPO had been slated for the fourth quarter of 2018.

Mubadala, the result of the 2017 merger between Mubadala Development Company and the International Petroleum Investment Company (IPIC), fully acquired Cepsa in 2011 and took the company private.

“Even though market conditions deteriorated significantly, the feedback from potential investors reinforced our view of Cepsa’s value and the strengths of the underlying business,” said Mubadala Petroleum & Petrochemicals CEO Musabbeh Al Kaabi.

“As a long-term investor, we will consider returning to the market when we believe conditions are favourable,” he added.

Global markets posted some of the most pronounced downturns this year last week on the back of the intensifying US-China trade war, surging bond yields, and new forecasts from the IMF projecting greater global instability and lower growth in 2018 and 2019.

The global market sell-off continued through to Monday due to, among other factors, investors’ fears about a potential breakdown in Brexit talks and the losses suffered by Chancellor Angela Merkel’s ally party the Christian Social Union (CSU) in the German sourthern state of Bavaria.

A continued face-off between Italy and the EU over its budget also contributed to the uncertainly.

Oil prices have also risen after tensions between the west and Saudi Arabia intensified over the fate of missing dissident journalist Jamal Khashoggi, who vanished earlier this month after visiting the Saudi consulate in Istanbul, Turkey.

“The most recent international economic developments have sowed considerable uncertainty in international capital markets,” Cepsa said in a statement.

The Spanish company’s petrochemicals division mainly produces surfactants – including linear alkylbenzene (LAB), linear alkylbenzene sulphonic acid (LABSA), and n-paraffin – as well as fatty alcohol products, including fatty acids, glycerine and fatty alcohol derivatives.

The company also procures phenol, cumene, acetone and derivatives, as well as some solvents.

Cepsa had been expected to float shares on four Spanish exchanges – Madrid, Barcelona, Bilbao and Valencia.

Pictured: Cepsa’s headquarters in Madrid
Source: CEPSA

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