Every company that needs cash must raise it from somewhere. In 2018, Siemens received a total of
Question:
Every company that needs cash must raise it from somewhere. In 2018, Siemens received a total of
€4.2 billion by issuing new equity of its subsidiary Siemens Healthineers on the German stock exchange, Deutsche Börse.
Why did Siemens choose to issue new equity? It based its decision on what would maximize the value of the company. In this case, equity was the most sensible option.
Siemens is a technology company and does not have extensive experience of raising large amounts of external financing. This is where banks come in. Although banks are best known for lending funds to borrowers and taking deposits, they are also very experienced in marketing and raising money from other investors. We call this type of activity ‘investment banking’, and a number of banking institutions specialize in this area.
Seven banks were involved in finding buyers for the €4.2-billion Siemens issue. These were: Deutsche Bank, Goldman Sachs, J.P. Morgan, BNP Paribas, BofA Merrill Lynch, Citigroup and UBS.
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