Family drama

Schaeffler gets second time unlucky with markets

The Schaeffler family has been unlucky with markets for the second time. The long-planned Frankfurt listing of their ball-bearings and car-parts maker has been pushed back amid the biggest scandal in the history of Germany's automotive industry - the cheating of emissions tests by Schaeffler's key customer Volkswagen.

Schaeffler has not ditched its initial public offering plans at the time of writing - just postponed the listing by one day, planning to announce the price range on October 5. But if the floatation of Bayer's 7.1 billion euro plastics unit Covestro is a template, the Schaeffler family will face a painful choice. Covestro's offer price was slashed by a quarter on October 1, and the volume of the IPO was reduced by 40 per cent.

The group already has been scraped by unpredictable events once: in 2009, the financial crisis thwarted its hostile takeover of rival Continental and pushed the debt-laden family firm close to bankruptcy.

Now as then, the timing is simply bad luck. But it may still weigh on the company's shares. VW, Europe's largest carmaker, has lost 38 per cent of its market capitalisation since its emissions cheating activities were uncovered, dragging down the wider European auto sector by 8 percent. Increasing concern about economic growth in China - the world's biggest car market - has not helped either.

One problem is that Schaeffler, despite being one of the industry's most profitable car-parts makers, comes with quirks. The family wants to keep full control over the business and is hence only offering non-voting shares. More than half of the 2.5 billion euros or so hoped-for IPO proceeds will go to pay down debt at the over-leveraged, unlisted family holding company, which also holds a 46 percent stake in Continental. If markets are feeling unforgiving, that could be a tough sell.