Holy Roman Empire

Chapter 1044: Chapter 58, Busy Frederick

Time is the best way to heal wounds, and after two years of settling, investors had recovered from the panic of the stock market crash.

Looking at the Vienna Securities Exchange, although the daily trading volume was still less than half of its peak, the overall market had returned to normal.

After the stock market crash that weeded out the weak and kept the strong, the number of companies on the market had decreased, but their quality had improved significantly.

Having eliminated the froth, the rational market was now much healthier. With the normal operation of the economy, a new wave of naive investors entered the market.

Compared to the predecessors who entered during the peak period, they were much more fortunate. Entering at a low point, they caught the wave of major economic development.

Although not everyone made money, most people earned at least a bit. If it weren’t for the large impact of the previous stock market crash, which left many people still fearful, there might have been another bull market.

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The initiative to list oil companies was launched against this backdrop. Unlike the sunset industries of later generations, the oil and chemical industry of this era was solidly high-tech.

As the world’s leading oil-producing and consuming nation, over the past decade, the Holy Roman Empire’s demand for petrochemical products had maintained double-digit growth each year.

Although petrochemical products had not yet become widespread worldwide, looking at Shinra’s demand, one could see just how massive this market was.

According to the calculations of socio-economic scholars, the world’s demand for crude oil was expected to increase to 35 million tons per year within five years, with the Holy Roman Empire alone accounting for 25 million tons annually.

This set of figures, perhaps unspectacular in later times where any country could surpass it, was considered astronomical at the time.

Based on the current international market price of crude oil, the crude oil industry alone represented a market worth 350 million Divine Shields per year, nearly catching up to the annual fiscal revenue of the Vienna Government.

However, when compared to the entire petrochemical industry, crude oil was just a small part. If fully developed, it could easily constitute a massive market worth at least 10 billion Divine Shields annually.

Most importantly, this market was in a period of rapid growth. Doubling the demand within five years was just the beginning; doubling again within a decade was not a fantasy.

Although the Royal Consortium was not the only oil producer, the extraction costs of its oil fields were the lowest in the world.

If Franz had not intentionally restricted the export of crude oil, it’s likely that the Royal Consortium would have monopolized the oil supply throughout Europe.

Were there really any competitors?

In the European world at the time, there were only two oil-producing countries: Shinra and Russia. The extraction costs at the Baku Oil Fields were not high, but the high costs of land transportation were burdensome!

With immature pipeline technology, transportation was a primary challenge the oil industry had to face.

Not only did the Russians encounter this issue, but the Federation across the ocean did as well. Fortunately for the Americans, most of their territory was plain, making it less difficult to install oil pipelines.

In contrast, the Baku region wasn’t viable. Given the technology of the time, even if a pipeline were built in Baku, the oil couldn’t be transported. “The world’s most expensive pipeline” wasn’t an undeserved title.

By comparison, the oil companies under the Royal Consortium were in a much better situation. With plenty of oil reserves, just exploiting the easily accessible coastal oil fields would satisfy market demand.

Low extraction and transportation costs, combined with the most advanced mining and refining technology in the world, clearly represented a strategic reduction in dimensions.

With so many advantages, it naturally made a significant profit. To date, these oil companies had become the biggest cash cows within the Royal Consortium.

Now that they were preparing to go public, naturally, there were many issues to consider. Frederick had been troubled for some time over whether to merge them into a behemoth for listing or to split and reorganize them into a multitude of powerful small enterprises.

The stakes were too high, and even Frederick felt terrified. Any mistake in decision-making could potentially cause losses of tens of millions, even hundreds of millions of Divine Shields.

It’s safe to say that since he had taken on this task, he had not had a moment of ease. Every day, he faced countless documents to review, and all major affairs required his decision.

The policy to prioritize the development of the petrochemical industry had been implemented, and the optimal time for listing had arrived. Accompanied by Frederick signing off on the document, the grand plan for the oil companies’ public offering was officially underway.

Four oil companies were slated for concurrent initial public offerings, aiming to raise 200 million Divine Shields in both Vienna and Frankfurt for investing in the supporting industrial chain for the petrochemical industry.

Upon receiving this message, the financial news media in Europe went into a frenzy.

“200 million Divine Shields”—the figure was truly staggering. Even when split into four parts, each portion amounted to 50 million Divine Shields.

This number still surpassed the financial revenue of 95 percent of countries worldwide. The currently highest-valued publicly listed company, the Austrian Electric Power Group, was valued at a mere 850 million Divine Shields.

It must be noted that the Austrian Electric Power Group controlled nearly 60 percent of Europe’s electricity supply, firmly standing as the world’s number one powerhouse.

If one went by the capital market’s valuation of these four oil companies, the highest of them had reached 570 million Divine Shields. Once listed, there was a high likelihood of surpassing the Austrian Electric Power Group’s leading market capitalization position.

Of course, high valuations had their reasons. In an era where petrochemicals were treated as high-tech products, the listing of an oil company was akin to telling a high-tech story.

Unlike other tech companies’ grand but vague dreams, the promises of oil companies were tangible and visible.

One could see this by looking at their assets and profits. Disregarding the hardcore machinery, plants, and technology for a moment, each oil company owned oil fields with billions of tons of crude oil reserves, yielding profits in the tens of millions of Divine Shields annually.

Coupled with the promise of double-digit profit growth rates each year and the market’s future projections for the petrochemical industry, a high valuation was inevitable.

In fact, had the companies not been split into four, this valuation could have soared even higher. Any industry tagged with the word “monopoly” was bound to receive a significant premium from the capital markets.

Take the Austrian Electric Power Group as an example—during its peak, its market capitalization once exceeded the barrier of 2.5 billion Divine Shields. The decline since then was attributed not only to the stock market crash but more importantly, to below-expectation performance.

With no choice given the impoverishment of Europe’s populace—though many cities had popularized electrical grids—the lower-class citizens constituting the majority simply couldn’t afford to consume.

The anticipated industrial electricity consumption growth only showed the reality after Shinra: not every country was keen on embracing new technologies, and electric motors hadn’t become widespread.

Additionally, some countries had to import coal, leading to high electricity production costs and causing the newly established electrical grids in various cities abroad to experience short-term deficits.

While the prospects were broad, the reality of slowing performance growth in the short term was undeniable, and naturally, the capital markets reacted accordingly.

By contrast, the oil companies fared much better. Accompanied by the booming automobile industry, the rate at which internal combustion engines gained traction far surpassed that of electric motors, and market demand was growing much faster.

…

“Your Highness, the pre-IPO stock incentive and advance subscription work have all been completed, and trading is expected to commence on December 21.”

No matter how intense the media controversy might have been, the largest IPO in the financial markets of the Holy Roman Empire had begun.

Ignored?

That was wishful thinking. If not for diverting attention, the Royal Consortium wouldn’t have planned for the oil companies to go public.

Whether it was financing before the listing or advance subscriptions, all were managed single-handedly by the Royal Consortium—a game of shuffling money from one hand to the other, how could the valuation not be high?

It was even better if no one else bought—the Consortium could simply buy up everything under alternate identities. Based on current market demand, the petrochemical industry was clearly the future direction of development.

According to estimates within the Consortium, once the petrochemical value chain was perfected, annual profits of these companies would surpass their current valuations.

In an era where the currency has not significantly devaluated, the global economic growth rate was slow. In shallow waters, no monster can grow, and given the limited market environment, companies maintaining double-digit profit growth rates annually were exceptionally rare.

In fact, such high-growth enterprises typically would not list publicly unless they genuinely encountered financial difficulties or were about to reach their development threshold.

Concerned about attracting too much attention and to facilitate hiding wealth, the Royal Consortium would likely be the only entity willing to list its top-quality companies.@@novelbin@@

“Understood. Let everything proceed as originally planned.”

For some reason, once everything had completed, Frederick felt profoundly empty.