TeamViewer shares drift lower in Europe stock market debut

German software company TeamViewer drifted lower in its stock market debut yesterday after the remote connectivity specialist launched Europe’s biggest initial public offering of 2019.Shares opened in line with the offer price of €26.25 but slipped to €25.32 in early trading as European tech stocks fell 2%, even though the offering was oversubscribed.The IPO delivered a bonanza for investor Permira, which bought TeamViewer outright in 2014 for €870mn.Its sale of a 42% stake generated proceeds of €2.21bn ($2.43bn).The float, which valued TeamViewer at €5.25bn, marks a rare tech debut on a Frankfurt market heavy with industrial and auto stocks. “TeamViewer has developed from a small IT company into a true global player,” CEO Oliver Steil, who moved from Permira two years ago to run the business, told cheering staff on the floor of the Frankfurt Stock Exchange.Permira’s proceeds exceeded the €2bn raised when Italian payments group Nexi floated in Milan in April, in what had been Europe’s biggest IPO this year so far.One trader said many investors viewed the IPO as expensive and that there was scepticism over the future intentions of Permira, which retains a 58% stake.The private equity house says it will remain a strategic investor.TeamViewer offers an “anyone, anything, anytime, anywhere” connectivity tool used in applications including remote IT support and online meetings.It’s also a play on the growth of the so-called ‘Internet of things’ – the billions of smart devices that are expected to populate digital workplaces and homes – and spans both desktop and mobile.The tool has been installed on 2bn devices, with the company running a ‘freemium’ model that allows cost-free access for personal users while enterprise customers pay a subscription fee.CFO Stefan Gaiser told Reuters that TeamViewer’s short-term priority was to build its presence in the Asia-Pacific region and United States.It will also beef up the marketing team for its enterprise product.The company lacks peers in Europe, and the big question for investors is whether it will be able to command the kind of valuations enjoyed by US players that trade on double-digit revenue multiples.Listed peers include Zoom Video Communications Inc, Okta Inc and Slack Technologies Inc, which listed on the New York Stock Exchange in June at a valuation of more than 50 times revenues. Shares in collaboration app Slack have nearly halved from their peak, however, reflecting the challenge of delivering revenue growth and turning a profit as Microsoft hits back with its competing product, Teams.TeamViewer estimates that its potential market, now worth €10bn, will treble in size by 2023, as companies invest in digital production and more people work from home.Its cash billings grew 25% last year to €230mn, accelerating to 37% growth in the first half of 2019.TeamViewer generated core cash profit margins of 52% and was profitable in the first six months of this year.Goldman Sachs and Morgan Stanley organised the IPO with the help of Bank of America, Barclays and RBC Capital Markets, while Lilja & Co acted as IPO adviser.