A column by Marco Fuchs: thoughts about time and space

How OHB's IPO led to greater transparency

Stock corporation law entails special obligations, but also opportunities for listed companies

May 29, 2019. Last week, OHB SE's shareholders came to Bremen to attend our annual general meeting. I am always very much looking forward to this date. It is like a big family reunion. At this meeting, we are able to present and explain ourselves to our shareholders. I am a big fan of this kind of transparency.

The need for transparancy

The need for transparency at different levels is also one of the main consequences of going public as a medium-sized family business. Our IPO was more than 18 years ago, the first trading day was March 13, 2001. Since then, we have been subject to a number of obligations - above all to transparency vis-à-vis our shareholders, the financial markets and the public. One of these duties also includes holding a shareholders' meeting once a year.

Why does a company go public at all?

But why does a company go public at all? Well, in these fast-moving times, medium-sized companies in particular regularly need money to grow. After all, growth requires investment - in new employees, in infrastructure, in new technology, and possibly also in takeovers, if a reasonable opportunity presents itself. One option is to finance growth from equity or corporate profits. For many companies, this is often not possible. Therefore, they resort to another possibility, namely to get capital from the stock exchange, in short: to obtain the necessary money from investors by issuing shares. With this money the company can then grow by conquering new markets, making acquisitions, investing in new technologies or developing new business models.

If everything goes well, the company makes more sales and higher profits, the value of the company increases, and the value of the share also rises. The shareholders and investors profit from this through price gains. In addition, the shareholders’ meeting can decide to distribute the resulting net profit to the shareholders in the form of a dividend, i.e. a profit distribution per share.

The IPO of OHB and the former OHB Teledata in 2001 was also driven by the idea of enabling faster and more diverse growth. OHB should be able to develop further activities derived from its core business with satellite systems. As a result of the IPO, we created a holding structure within which further activities could and can be carried out in various companies.

70 percent of the shares are held by the family

However, there is one major difference between OHB and other listed companies: 70 percent of the shares are held by the family. And we, the Fuchs family, do not intend to sell any of our shares. This information is very important for the background to this topic. Despite our enormous growth over the past 18 years, we have not diluted the family's share of the share capital. In other words, OHB has always managed to finance growth from operating activities.

For this reason, the importance of a stock market listing for OHB also derives from the certainty that it will be possible to make use of the capital market should it seem necessary.

However, the much more significant effect of the stock market listing on OHB's day-to-day business results from the obligations arising from stock corporation law. As a result, there is a much greater awareness of how capital must be handled.

Stock corporations are subject to strict auditing an compliance rules

Not only because shareholders naturally have a strong interest in this being done to their benefit. As a stock corporation, we are subject to strict auditing and compliance rules; we must immediately disclose any activity that could influence the share price to the public by means of ad hoc announcements. In addition, shareholders must be informed about the company's business activities by means of quarterly and annual reports as well as a sustainability report.
I consider this public scrutiny to be one of the greatest benefits of our listing. Because it forces us to show much greater discipline in business conduct than would perhaps be the case with another form of family-run corporation, such as a GmbH.

Of course, stock market listing also offers opportunities that can be used very positively for public perception. An annual report is published every year, for example, which we at OHB always pay a great deal of attention to. We are making some effort in terms of content and design in order to be able to use it for our external image as well. The same applies to the quarterly reports. Finally, the annual shareholders’ meeting is of course also a stage on which a company can present itself to the public. After all, a listing on the stock market always means a greater perception in the media. I am aware that it is precisely this greater attention that acts as a deterrent, especially for many SMEs. In reality, however, it is impossible to avoid publicity in this day and age. Many developments have contributed to this: digital media, social media, the much greater awareness of so-called good corporate governance in society and the explosive reproduction of information.

Companies today depend on perception

Companies today depend on perception. Not so much for the reason of making their figures known, but rather because a growth-oriented company, including OHB, constantly needs new, competent employees. In the wake of demographic change, the battle for the best minds is becoming increasingly fierce. Companies that are perceived as attractive employers certainly have an advantage in this competition.

I was therefore very pleased to see a number of young shareholders at our general meeting. One young shareholder even spoke in the debate and asked interesting questions about the social composition of the workforce. Such interest makes me confident that OHB, as a leading technology company, will remain attractive enough for young, creative people in the future - whether as potential employees or shareholders.


Personal details:

Born in 1962, Marco Fuchs studied law in Berlin, Hamburg and New York. He worked as an attorney in New York and Frankfurt am Main from 1992 to 1995. In 1995, he joined OHB, the company that his parents had built up. He has been Chief Executive Officer of OHB SE since 2000 and of OHB System AG since 2011. Marco Fuchs is married and has two children.