KKR completed its €423m exit from MTU Aero Engines last week with a cleanly executed trade through Goldman Sachs. The private equity firm conducted a small auction on Monday night with the IPO banks – Goldman, Deutsche Bank and UBS – and one other firm early in the evening, allowing the winning bidder to launch the bid the same evening.
Banks had been made aware that the deal would come later that evening and as a result the stock had been discussed during the day. There was plenty of specific speculation that there might be an MTU deal very soon and, although the stock was largely unaffected, it did lose around 1% in the last two hours of trading.
KKR was understood to have been open with the company on the trade, and the company had made it clear that it would issue a trading update once the deal was complete, but not before.
Goldman launched the deal overnight with guidance of €26.25 to the market, off a close of €26.41. The book had momentum from the start and was rapidly half covered thanks to strong support from German accounts. The deal ended several times covered.
The sale represented 29.3% of the company and, as KKR was exiting, this was the final opportunity to get a sizeable position. The sale takes the free float to 94.7%, with just management stakes remaining, so this also marked the total removal of overhang.
Pricing was set at €26.30, a discount of just 0.4% to the close, although some accounts had to be worked up to this point.
Proceeds totalled €423m.
Although German accounts were the early drivers of the deal, the final book saw international accounts, led by the UK, taking most of the stock.
The deal marks KKR’s second successful exit in Germany while other companies have struggled to get deals away. Wincor Nixdorf was one of the few to list in 2004 and KKR completed the exit in January 2005 when the stock had traded up 50% from the issue price.
MTU has been a more rapid exit, but the placing price was still a 25% premium to the June 2005 IPO.