IPO that raised $1 billion implodes after 8 months

Denmark's second-biggest initial public offering since 2010 has just imploded.

OW Bunker A/S, which provides fuel to the marine industry, said it couldn't persuade its bankers to provide the cash it needs to keep doing business. That followed an announcement last night revealing senior OW Bunker employees in Singapore committed fraud, costing as much as $125 million.

The company, whose shares have been suspended since yesterday, now says investors need to assume that its equity has been wiped out as it files for an in-court restructuring. Just eight months ago, investors were lining up, eager to throw their money into an IPO that raised almost $1 billion and saw the company's shares surge 21 percent in their first day of trading.

Nordea Bank AB, which helped arrange the sale and has been urging clients to buy OW Bunker shares since Oct. 24 until suspending its recommendation today, says it's "shocked" by the company's subsequent collapse.

"No one can foresee fraudulent activity by individuals," Stephan Ghisler-Solvang, the bank's spokesman in Copenhagen, said in a phone interview. "No one could foresee that the company would incur losses of this magnitude after the IPO."

He says the bank, Scandinavia's largest, is now awaiting further updates from OW Bunker. Nordea was a bookrunner on the IPO, together with global co-leads Carnegie Investment Bank and Morgan Stanley.

"We strongly believe that we have conducted a thorough and correct process assisting OW Bunker in the IPO process together with the two joint global co-ordinators," Ghisler-Solvang said.

IPOs Pulled

The scandal surrounding OW Bunker comes as Europe's appetite for IPOs cools following a surge earlier this year. Companies listing shares in Europe raised about $43 billion during the first nine months the year, more than three times last year's $12.2 billion, according to a report by PricewaterhouseCoopers LLP. Yet since the start of the second quarter, 25 companies have pulled their IPOs, compared with just nine in the first nine months of last year, PwC said.

There are also signs some recent public offerings may have been overpriced. Listings such as Rocket Internet AG and online retailer Zalando SE sank in their first days of trading last month after being over-subscribed several times.

"There has been somewhat of an IPO hype where fear of missing out on a good IPO became a concern and that's turned into more of a concern of having a bad after-market with the IPO," Harry Klagsbrun, a partner at EQT, said in an interview. While the U.S. is showing good momentum and will probably continue to do so, "I'm more concerned about Europe," he said.

OW Bunker's March IPO gave the company a value of 5.33 billion kroner ($900 million), making it Denmark's largest IPO after cleaning services provider ISS A/S, which went public in February in a 21.9 billion-krone listing.