Monday was not an auspicious day to list oneself on Germany's long-suffering stock market. By midday, the DAX exchange had lost two percent of its value. But bike maker Mitteldeutsche Fahrradhersteller, or MIFA, pedalled onward, and despite the downward trend, watched as the 1.5 million shares it floated were snatched up by investors.

Stock market watchers hope it is a sign of things to come.

MIFA is the first firm to launch an initial public offering (IPO) on the German exchange since November 2002, when the Swiss company Erotic Media took the plunge. The DAX has not seen a new German player since March 2002. Two months ago, two German high-tech firms delayed their planned listings, saying they were waiting for market conditions to improve.

Companies have been put off by the sluggish performance of the German stock market, which has been struggling against a barrage of poor economic forecasts, feeble consumer confidence and uncertainty in the face of global political events.

Promising Start

MIFA's five-day IPO, which kicked off on Monday, is defying the gloomy mood and so far, its gamble looks to be paying off. The listing has been oversubscribed more than three times and by early Monday afternoon the stocks were trading at €9.48, well over their initial offering price of €9.25.

The company said 85 percent of shares were allocated to institutional investors and 15 percent to private investors.

Based in the eastern town of Sangerhausen, MIFA has reported healthy growth and profits since 2000. Last year, the company produced 535,000 bicycles and had revenues of €63.3 million ($76.3 million).

Many MIFA bikes are sold through large chains such as Metro, Kaufland and the mail-order company Neckermann. In 2003, the company had around 422 employees.

According to MIFA head Peter Wicht, the company is set for further growth over the next few years. The company reports it has the capacity to produce up to one million bicycles a year. It wants to use €14 million ($16.6 million) from the stock floatation to further strengthen its capital base, lower its interest charges and help fund expansion in Europe.

Heading the pack

Although the MIFA IPO is fairly small potatoes in stock market terms, it is forging a path that other small and medium-sized firms are lined up to follow.

Automatic teller machine maker Wincor Nixdorf is set to go public on May 19, followed by logistics firm Hapag-Lloyd and car maintenance company Auto-Teile-Unger.

Germans first discovered the joys of share trading in the 1990s when the high-tech boom was in full swing. A series of high-profile IPOs, such as Telekom, spread the stock market fever and the number of personal investors skyrocketed. But when the bubble burst in 2000, the number of small investors fell off dramatically, as several first-time stock holders got their fingers burnt.

The first large offering after the long, dry spell is slated for June 21 when Germany's Postbank lists its shares.

If the upcoming IPOs go well, analysts say, it could prove a turnaround and respark interest in the stock market. But market watchers are refraining from too much enthusiasm, since the fundamental health of the German economy is still shaky.

Facing a steep incline

Despite the positive early signs around MIFA's offering, financial consultants warn against expecting overly strong returns. A study carried out by SdK, an organization which counsels small investors, found that one-fourth of German IPOs since 1997 were complete failures, resulting in total losses for investors.

In the 439 floatations during the past seven years, according to SdK, just under 92 percent resulted in losses for investors. In around 77 percent of them investors lost more than half of their capital.