March 9, 2020 / 4:21 PM / 21 days ago

Wintershall to delay Frankfurt IPO on coronavirus, price war - sources

LONDON (Reuters) - The listing of energy group Wintershall DEA, planned for late-2020, is expected to be put on ice on growing fears the fast spread of coronavirus and a oil price war between Russia and Saudi Arabia will continue to depress markets, sources said.

The company, created from the merger of the oil and gas division of German chemicals group BASF and Russian billionaire Mikhail Fridman’s LetterOne, chose Frankfurt for its listing that could value it as much as $20 billion (15.2 billion pounds).

Preparations, which started in 2019 with Wintershall’s appointment of financial advisors including Deutsche Bank (DBKGn.DE), targeted the second half of 2020 for the deal.

But banking sources now say as the outlook for oil and gas prices remains weak for the rest of the year and investor interest in fossil fuel companies continues to wane, financial advisors on the deal have turned increasingly cautious.

A BASF spokesman said Wintershall is preparing for an initial public offering (IPO) in the second half of 2020, depending on the market environment.

Global stocks have tumbled recently as investors stay away to hedge the economic trauma of the coronavirus, while oil prices plunged more than 30% on Monday after Saudi Arabia raised its production significantly following the collapse of OPEC’s supply cut agreement with Russia.

The company also needs to take into account the Nord Stream 2 gas pipeline - a project running from Russia to Germany opposed by Washington - that Wintershall is backing financially when deciding the best timing for a listing, one of the sources said.

Washington fears the pipeline will ultimately increase the European Union’s reliance on Russian gas.

Wintershall-Dea aims to boost its output by around 30% to at least 750,000 barrels of oil equivalent per day by 2023.

European IPO volumes hit their lowest level in seven years in 2019, with just $23.8 billion raised, a 43.4% slide from 2018, Refinitiv data shows.

Listed oil and gas companies have also struggled, often underperforming oil prices and other sectors, offering a tough backdrop for any company contemplating a public listing.

Shares in Saudi Aramco 2222.SE, the world’s largest oil company which began trading in Riyadh in December, have fallen more than 11% this year, slumping below their IPO price for the first time on Sunday.

Reporting by Clara Denina; additional reporting by Patricia Weiss and Arno Schuetze in Frankfurt. Editing by David Evans

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