(Bloomberg) — Siemens Energy AG shares declined on debut in Frankfurt, giving the company whose technology is behind roughly one-sixth of the world’s electricity a lower-than-expected market value.
The shares trimmed a drop of as much as 13% to trade down 1.2% to 21.75 euros at 10 a.m. in Frankfurt, after opening at 22.01 euros. That gave the company a market capitalization of around 15.8 billion euros ($18.4 billion), compared with the 17 billion-euro net book value parent Siemens AG gave it ahead of the spinoff.
Monday’s listing is the next step in the unwinding of Siemens — a German conglomerate making a vast array of goods that spans medical scanners, locomotives and gas turbines — into separate companies better suited to confront their own unique challenges.
The sale is taking place at a time of transition toward greener energy sources, which could hit its dominant coal and gas-turbine business and cloud the company’s long-term growth prospects. There will be no shortage of hindrances ahead for the extraction, processing, and transportation of oil and gas, as well as the generation, transmission and distribution of power and heat that Siemens Energy handles.
“Siemens Energy’s spinoff showcases a gas-turbine technology whose growth has been stunted by climate change, though gas should remain a key energy source,” Johnson Imode, an industry analyst for Bloomberg Intelligence, wrote in a Sept. 23 report. He estimated Siemens Energy may be worth about 20 billion euros based on its guidance for earnings next year.
The listing is one of the last moves under Chief Executive Officer Joe Kaeser to turn one of Europe’s largest industrial manufacturers into a more manageable entity. The 63-year-old’s spinoff of its medical business, Siemens Healthineers AG, was Germany’s biggest initial public offering of the past four years.
Siemens Energy will own a majority stake in separately listed wind-power company Siemens Gamesa Renewable Energy SA, and last year generated revenue of 28.8 billion euros with 91,000 employees.
Siemens handed 55% of Siemens Energy shares to its shareholders, and the parent has said it will further reduce its stake within 12 to 18 months, which could reignite interest in consolidation, according to BI’s Imode.
Before deciding on a spinoff, Siemens mulled other options for the business. Bloomberg News reported last year that Mitsubishi Heavy Industries Ltd. held talks with the company about a possible gas-turbine business combination, and that Siemens had discussions with other firms about a full or partial sale of its division.
Siemens still holds 79% of Siemens Healthineers stock, which has been among the more successful recent listings in Germany. A plan to combine Siemens’s railway business with Alstom of France, however, was vetoed by the European Commission.
Kaeser will leave the carrying out of one more spinoff to his successor, Roland Busch, who will take over most CEO responsibilities later this week. In February, the company will present shareholders with its plan to offload its Flender GmbH unit that makes mechanical drives in what will be a company with about 2 billion euros in sales and 8,500 employees.
(Updates with shares starting in first paragraph)
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