Oil & gas has become something of a pariah sector, owing to the collapse of the price of Brent crude — from more than $110 a barrel 18 months ago to less than $30 today.
SIF intends to navigate that difficult market backdrop by emphasising its activities in wind during meetings with investors over the next two weeks.
“The fall in the price of oil is quite strongly in the background,” said a banker on the deal. “But how we pitch it to investors is we try to steer them away from the oil and gas sector and onto the strong fundamentals of offshore wind.”
SIF has figures to back that argument: while it is active in oil & gas, more than 80% of its revenues comes from wind , according to Claire Verhagen, the firm’s investor relations director.
Verhagen told GlobalCapital that the firm’s wind order book was full for 2016, and added that its oil and gas order book, while not full, was still at a “comfortable level” this year. And some orders have already come in for next year, she added.
Asked whether the fall in the price of oil could have longer term implications on SIF’s business, Verhagen said: “That’s something we’ll have to see in the future, but its production capacity is very flexible. What SIF makes for oil and gas, it can make for wind .”
ABN Amro and HSBC are global coordinators on the deal, which is the first IPO to be launched in Amsterdam this year. ING and Rabobank are joint lead managers.
The offering will consist of at least 35% of the firm’s existing shares, and will not include primary issuance.
The banker said the firm did not need to sell new shares because it was “fully funded”. He added that the rationale for the IPO was to give the selling shareholder, Egeria, an opportunity to diversify its portfolio, as well as to give SIF greater exposure.
Dutch private equity firm Egeria bought into SIF in December 2005 and now holds 82.5% of the business. Founding family members and former management hold the rest.
SIF did not disclose what valuation it may target, but the banker on the deal said it may obtain about €500m, “give or take €100m”. When asked about that figure, Verhagen said it did not sound familiar.
At €500m, the IPO would total €175m.
The banker said there were no great comparables to guide the pricing of SIF’s listing, but did point to a number of stocks that could prove useful. He cited wind turbine manufacturers Vestas, Nordex and Gamesa, as well as Benelux mid-cap firms Accell, Barco and Bekaert, among others.
“We are now getting analysts on the road,” the banker said, pointing to the pre-deal investor education. “The initial response has been relatively positive.
“With this market backdrop, we just need to convert interest into firm orders,” he added.
Though the Euro Stoxx 50 index rose 1.54% on Tuesday, conditions have been difficult in Europe and beyond since the start of the year, leading a number of issuers to wonder when best to launch their listing process to avoid being engulfed by the market volatility.
“We look at the strength of the company and not the volatility of the markets,” Jan Bruggenthijs, chief executive officer of SIF, told GlobalCapital. “We think it's a very good investment case.”
Asked whether the volatility could nonetheless prove difficult to weather, Bruggenthijs said: “That’s what we’ll explore in coming weeks.”
Founded in 1948, SIF is a manufacturer of large steel tubes used offshore. Having originally focused exclusively on oil, gas and chemicals, SIF began shifting its business towards offshore wind in 2000.
The firm’s Ebitda was €46m in 2014 and reached €39m during the first nine months of 2015. SIF intends to release its full FY 2015 results in late March.