Pbb debuts on stock exchange, IPO priced at bottom of range

German lender Deutsche Pfandbriefbank (PBB) made its debut on the Frankfurt stock exchange on Thursday with a price of €11.45 a share, up 6.5% on the issue price.

The float price was set on Wednesday at €10.75 a share - at the lower end of expectations which ranged between €10.75 and €12.75 per share.

The offer comprises a maximum of 75.1% of the share capital – or 100,990,956 ordinary bearer shares –as well as a greenshoe option of 4.9% of the share capital to cover a potential over-allotment.

'Following its successful realignment, pbb has now embarked upon a new chapter in its history, as a listed public company,' said Günther Bräunig, chairman of the Supervisory Board of pbb. 'The achievements of the last years are attributable, above all, to pbb's senior management and staff.'

Andreas Arndt, pbb's co-CEO and CFO, said: 'The strong investor interest we have seen affirms our conservative business model. We want to continue boosting pbb's profitability over the next few years thus continuing the success story of the past years.'

Following the IPO, pbb’s owner, Hypo Real Estate Holding will continue to hold between 20 and 24.9% of the share capital of pbb, depending on whether the greenshoe option is exercised or not.

Citigroup Global Markets and Deutsche Bank acted as joint global coordinators and joint bookrunners for pbb's flotation. JP Morgan Securities, Commerzbank and Joh. Berenberg, Gossler & Co. acted as additional joint bookrunners.

Despite Greece's woes and fears of a financial crisis, Pbb decided to go ahead with its initial plan for an Initial public offering in July.

The bank had a dramatic change of heart last month when it announced that it was abandoning its ‘dual track’ disposal process in favour of an IPO. The public announcement of the intention to float pbb followed resolutions passed on 10 June 2015 by the Extraordinary General Meetings of pbb and HRE, based on a positive vote by the Interministerial Steering Committee.

Prior to the flotation, Pbb was fully-owned by state-owned HRE, which, in turn, is 100% owned by SoFFin, the Financial Market Stabilisation Fund set up by the German government following the collapse of Lehman Brothers in September 2008.

HRE was required to offload pbb by the end of this year in order to fulfill a condition imposed by the European Commission for its state bailout at the onset of the financial crisis. Pbb has already repaid ‘a sizeable chunk’ of the financial aid it received from the German government in 2009.