Derby Cycle is ready to hold a stock market listing on the Frankfurt stock exchange to finance its international development and expand in e-bikes. The company is Germany's largest bicycle manufacturer by revenue and focuses on mid- to top-tier models. In the financial year ended last Sept. 30, the group sold about 430,000 bicycles, of which 44,000 were e-bikes, and generated revenues of €173 million. Derby booked operating profits (Ebit) of €12 million in the full year, representing 7 percent of revenues.
The German company did not give any details about the transaction. But it indicated that it could launch the listing process soon to take advantage of improved conditions on financial markets as well as strong growth in the e-bike sector.
There is speculation that the IPO could be held in the first quarter of 2011 and may be the first listing on the Frankfurt stock exchange this year. The group has already appointed three banks to oversee the deal, which could involve the sale of existing shares as well as newly issued stock to finance the group's expansion.
Derby is owned at 85 percent by a German private equity company, Finatem. The remainder of the capital is in the hands of Derby's management. Finatem bought Derby Cycle from the Raleigh group in 2005 for €31.5 million, along with license rights for the Raleigh brand in Germany, Austria and Switzerland. Derby also sells bicycles under the brands Focus, Univega, Rixe and Kalkhoff.
The objectives of the group are to reinforce its presence in the German and European bicycle market, further develop its e-bike business and expand outside Europe. Derby Cycle is still largely focused on the German market, Europe's largest with annual sales of around 3.8 million bicycles, where it achieves nearly 73 percent of sales. The company claims to control more than 20 percent of the Germany market for e-bikes.
Derby is the third-largest European bicycle manufacturer after the Dutch group Accell and Cycleurope of Sweden, owned by the Grimaldi group. Accell, which is traded on the Amsterdam stock exchange, has the Netherlands and Germany as its two main markets and claims to be the European leader in e-bikes. The firm posted sales of €573 million in 2009 and an Ebit of €50 million, representing an Ebit margin of 8.7 percent. Financial analysts estimate that Accell's turnover rose to €593 million in 2010 but the Ebit margin is seen shrinking to 8.4 percent as Ebit remains unchanged. Accell has a market capitalization of about €400 million, or eight times Ebit. If Derby Cycle were to trade at a similar multiple, its market capitalization would be around €100 million based on 2010 results.
