For the first time in eight months, a new company was floated on Germany's Neuer Markt for growth stocks. REpower Systems develops and makes wind power rotors and turbines.
Windmills in northern Germany
It wasn't a cause to bring out the bubbly, but this week financial analysts in Germany at least had some reason for celebration. A new company dared to go public on Germany's Neuer Markt - the first in eight months.
REpower Systems develops and makes wind energy rotors and turbines. In light of the scarcity of fossil energy reserves, the company sees great potential for renewable resources like the wind for the future.
REpower's headquarters are in Hamburg, but the company also has locations in Rendsburg, Husum and Trampe. All of these cities are located in northern Germany – a part of the country that is absolutely flat. Therefore strong winds from the North- and Baltic Seas always drive across the land.
Husum is a harbor town on the North Sea. REpower uses the harbor to ship its products from here. In addition, REpower hopes to develop the offshore market, which it considers highly promising, from its Husum base. Trampe, on the other hand, is located North-East of Berlin and offers good access to potential markets in Eastern Europe.
The climate on Neuer Markt
Even though the situation at the German stock market and the Neuer Markt is anything but rosy, REpower still decided to go public this week. The company needs fresh capital to be able to go ahead with its expansion plans.
REpower's chairman of the board, Fritz Vahrenholt, was well aware of the risks of the undertaking. "The climate isn't that good at the moment. There's no denying that. But we can't wait any longer," he told Deutsche Welle before this week's flotation.
But overall conditions were favorable for REpower going public. The latest statistical data for Germany show that the economy is recovering. And investors' confidence seems to be returning with the economic upswing. "The issue has been oversubscribed by five times," Vahrenholt explained before the flotation. "Investors have shown a lot of interest. We've got a good track record: a 50 percent growth forecast for this year and the next, as well as a two-digit profit margins. And things are looking up for wind power."
In the end, the flotation was a success. REpower shares ended the first day's trading slightly above the 42 euro ($ 36.5) issue price.
Stock broker Rainer Roubal was cautiously optimistic "This is the first issue on the Neuer Markt this year. So we'll have to have to wait and see. Of course, if it's successful it could send a bit of a signal."
At the end of the first day of trading, a sense of relief settled over REpower's Hamburg headquarters. "The stock market can be unjust. But our efforts have been rewarded," Fritz Vahrenholt said. "This is one of the happiest days in my life. It's a bit like when your wife gives birth to a son. It's a big step for a business. We won't forget this day soon."
The IPO has given the firm a cash injection of some 82 million euro ($ 71 million). That money can now be invested in new technology.
Olaf Struck is already planning the next generation of wind farms. He envisages large wind power platforms, far out at sea, that can make the most of the turbulent North Sea weather.
REpower aims to have megaturbines of this kind up and running within two years.