Rich pickings

11 May 2005 By Marianne Brun-Rovet

The private equity group looks as if it will make nearly four times its money in just 18 months by funding a cheap deal with cheap debt. With returns like these, it s little surprise that financial buyers are swarming around German assets.

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MTU Aero plans to float on the Frankfurt stock exchange in early June in a move that could value its equity at up to E1.5bn.

The German aircraft engine manufacturer plans to raise E270m through a primary issue to pay down some of its debt, according to sources close to the company.

An additional E500mE600m would be raised through a secondary issue that would allow Kohlberg Kravis Roberts, the private equity firm that owns 92% of MTU, to halve its stake.

KKR bought MTU from German carmaker DaimlerChrysler in late 2003 for E1.5bn. MTU reported earnings before interest, tax, depreciation and amortisation of E246m for 2004, a 40% increase on the year before.

Deutsche Bank, Goldman Sachs and UBS are the lead managers for the issue, which would be the largest in Germany this year, following payTV group Premiere, which raised E700m in March.

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