Capital Measures: Bond Issues – Karlsberg Brauerei GmbH


Karlsberg Brauerei GmbH is one of the largest family-owned brewery groups among Germany’s roughly 1,400 breweries. The demand-oriented corporate strategy is based on the development, production and distribution of a broad range of alcoholic and non-alcoholic beverages. The main focus lies on strategic brands such as Karlsberg, MiXery and Gründel's. In cooperation with international partners, Karlsberg has added trendy brands like Moritz, Bundaberg, Menabrea and Fresh Tea Shop to its portfolio. Moreover, the company supplies international retail chains with a range of retail brands specifically developed for this purpose, with the main focus placed on the Western European market. Exports to non-European markets, especially Asia, Africa and South America, are gaining importance.

Task and result:

Having successfully supported the company’s first bond issue at the Frankfurt Stock Exchange in 2012, IR.on AG subsequently provided the company with assistance and advice and was also instrumental in the second bond issue in spring 2016.

Established in 1878, the successful family-run company from the Saarland implemented this capital measure to take advantage of the favourable interest rate environment in order to strengthen its medium to long-term financing structure. At 5.25%, the annual coupon of the new EUR 40 million corporate bond was set at the lower end of the targeted range of 5.25% to 5.75%. Prior to the issue, the company had committed itself to using the proceeds from the issue for the early repayment of its first EUR 30 million bond with a coupon of 7.375%. The additional proceeds will be used to fund current investments.

A major challenge for the communication activities was the market environment for SME bonds. The very difficult situation, not least resulting from the recent insolvencies of fashion company Steilmann and fuel manufacturer German Pellets GmbH, led to the financial media taking a very dim view of the market segment. Another challenge for the public offering in Germany and Luxembourg was to explain the special aspects of the transaction - e.g. the fact that the coupon was to be determined only after the end of the subscription period - in direct dialogue primarily with private investors. In this context, the company benefited from its pro-active and transparent capital market communication of the past three-and-a-half years.

Just like the first issue, this second issue was closed prematurely on the first day of subscription due to high investor demand. Private investors accounted for about one fifth of the subscriptions. The successful issue shows that the company has established itself as a reliable capital market participant and a solid investment in a challenging environment. It also demonstrates that well-positioned medium-sized enterprises with a sustainable focus and a clear commitment to the capital market stand a good chance of implementing a diversified financing structure in the capital market at attractive terms even in a difficult market environment. 

IR.on AG acted as communication and marketing consultant on this project. The transaction was the 22nd corporate bond issued with assistance from IR.on. The proceeds from these issues totalled over EUR 1.5 billion.

The 2016/23 corporate bond of Karlsberg Brauerei GmbH has been listed in the "Scale" segment of the Frankfurt Stock Exchange since 1 March 2017.

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