The first major IPO in Europe for months could give new issues in Germany a boost.

Web hosting and cloud provider Ionos officially announced its IPO plans on Tuesday. The United Internet subsidiary is aiming to go public on the Frankfurt Stock Exchange in the course of the first quarter.

According to the usual time frame, the initial listing is expected in mid-February. The company is therefore expected to publish the price range in which the shares will be offered in the coming weeks. An insider recently estimated the total valuation of Ionos at up to five billion euros. As no capital increase is planned and United Internet reportedly intends to remain the majority shareholder, this results in an issue volume of up to 2.5 billion euros. The listing on the regulated market (Prime Standard) would make Ionos a candidate for inclusion in the MDax small cap index.

The waiver of a capital increase is not necessarily a burden for the stock market candidate, said analyst Frederik Altmann from the brokerage firm Alpha. Otherwise, the free float could be somewhat low. United Internet currently holds 75.1 percent of the shares. The remainder is held by financial investor Warburg Pincus.

OPPORTUNITY SEIZED

Ionos has been toying with the idea of going public for a long time. Last year, however, numerous companies put their plans on the back burner due to the turbulence on the markets. The issue volume in Germany in 2022 was almost solely attributable to sports car manufacturer Porsche. At around 9.4 billion euros, the Volkswagen subsidiary was the second-largest IPO in the world.

The positive mood on the stock markets is currently playing into the hands of potential IPO candidates. Since the turn of the year, the Dax has gained almost nine percent, making up a large part of its losses from 2022. The shares of Ionos' parent company United Internet gained 3.6 percent at times on Tuesday after falling by almost 46 percent last year.

In Europe, Klarna, among others, is in the starting blocks for a stock market debut. In a financing round in May 2022, the Swedish installment payment specialist was valued at the equivalent of around 30 billion euros.

WEBSITES AND WEBSHOPS

According to Ionos, it is the market leader in web hosting in Europe for small and medium-sized companies. Cloud solutions have accounted for around ten percent of its business to date. Ionos' business model is relatively immune to economic fluctuations, as around 90 percent of its revenue comes from subscriptions.

The company is forecasting growth of 15 to 18 percent for 2022, following revenue growth of 19 percent in the first nine months. In the previous year, revenue amounted to 1.1 billion euros. In the medium term, Ionos is confident of annual sales growth averaging ten percent and an adjusted operating profit margin of more than 30 percent. The convincing figures should arouse investors' curiosity, said investment strategist Jürgen Molnar from brokerage firm RoboMarkets.

When it comes to acquisitions, Ionos is pursuing an opportunistic strategy, said CFO Britta Schmidt in a conference call. "However, there are currently no concrete plans." Ionos' most important rivals include GoDaddy and OVHCloud.

(Edited by Olaf Brenner. If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).

- by Hakan Ersen