United Internet AG is eyeing a potential market value of as much as €5 billion ($5.3 billion) in the planned listing of its web hosting arm Ionos Group, in what’s set to be a litmus test for Europe’s moribund IPO market, people familiar with the matter said.
(Bloomberg) — United Internet AG is eyeing a potential market value of as much as €5 billion ($5.3 billion) in the planned listing of its web hosting arm Ionos Group, in what’s set to be a litmus test for Europe’s moribund IPO market, people familiar with the matter said.
Ionos’s owners, United Internet and Warburg Pincus, have been holding preliminary meetings with fund managers in recent weeks to gauge investor appetite for the float, the people said, asking not to be identified because discussions are private. They plan to push ahead with the share sale by February based on investor feedback, they said, though timing and valuation are fluid.
Ionos may be one of the first to try reopening the region’s IPO market, which has come to a virtual standstill as investors turn risk-averse amid rising interest rates and heightened inflation. The owners are betting on pent-up demand among investors, a profitable and growing business and stabilized economic outlook to buoy the listing.
Investors have been discussing a potential enterprise value for Ionos’s hosting operations of between 14 and 20 times its estimated 2023 earnings before interest, taxes, depreciation and amortization, according to the people. They’re comparing the business to publicly traded peers like GoDaddy Inc. and Squarespace Inc.
Ionos has more than 6 million customers, with a focus on small- and medium-sized enterprises in Europe and North America, according to a recent release. The company also runs a smaller, fast-growing cloud business, which competes with firms including France’s OVH Groupe SAS and New York-listed DigitalOcean Holdings Inc.
The multiples being discussed for the web hosting and cloud business would translate into an equity valuation of roughly €4.5 billion to €5 billion for Ionos after subtracting the group’s net debt of €1.2 billion and applying an IPO discount, the people said.
United Internet owns about 75% of Ionos, while Warburg Pincus owns the remainder. The size of the stake sale will depend on demand, but both parties are likely to sell down and the buyout firm may seek a full exit, they said. They’re hoping to take advantage of buoyant valuations from recent transactions in the industry, including a combination of private equity-backed Dogado Group and Group.One earlier this month.
Shares of United Internet have declined by almost half this year amid a broader selloff in tech stocks, giving the company a market value of €3.6 billion. The German firm has selected JPMorgan Chase & Co., Deutsche Bank AG, Berenberg and BNP Paribas SA to lead the Ionos IPO as joint global coordinators, Bloomberg News reported in November.
Terms of the IPO haven’t been finalized and could change depending on market conditions. Representatives for United Internet and Warburg Pincus declined to comment.
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