SeniVita Social Estate plans capital reduction ahead of IPO

German care homes developer SeniVita Social Estate is to embark on a capital reduction ahead of a long-awaited IPO in Frankfurt.

The 5:1 reduction in capital from €10 million (US$11.3 million) to €2 million was approved at the annual general meeting. In a statement, the group emphasised that the capital reduction will not change the current shareholding, only the amount of the share capital.

The change is targeted at its bondholders and should improve the conversion ratio in favour of holders of its outstanding convertible bond against the backdrop of the planned IPO.

In 2015, the group sold €50 million five-year convertible notes at 6.5% via ICF Bank. The May 2020s currently convert at the rate of €1,000 into 100 shares at the conversion price of €10.00. The bonds are rated BB by Euler Hermes.

The board intends to set a new conversion window later this year.

The bonds are not looking especially happy in the secondary market at the moment. They were last seen at 79.9/85.9 to yield 8.08%. An improved conversion rate would certainly attract the attention of buyers.

An IPO for SeniVita Social Estate has been on the cards for a number of years. The last statement that the company made on the subject was in August last year when it said that a Frankfurt listing would occur before January 2020.

A question for investors is the group’s profitability. In mid December, it admitted that it would report a loss for 2018. In the first half of the year, it reported a loss of €1.9 million on revenues that had more than halved to €4.6 million.

Headquartered in Bayreuth, SeniVita Social Estate was formed out of SHB Senioren-Hausbau Verwaltung in 2004.