Europe's largest internet flotation got away to a comfortable premium yesterday despite the continuing market turmoil over hi-tech shares.
Shares in T-Online, the internet service provider owned by Deutsche Telekom, were offered in Frankfurt at €27 (£16.26), opened at €28.50 and closed at €37.50.
The company's ability to buck the market trend stemmed mainly from the very low price that Deutsche Telekom was asking for the shares.
The former German telecommunications monopoly originally hoped to be able to sell 10% of T-Online for €50. But institutional shareholders balked at the price.
The price range was then lowered to €26 to €32 a share. The collapse in the new-tech share bubble then forced the group to offer the shares at the lower end of the range, reducing its take from $3.1bn to $2.6bn.
The offer, which had attracted widespread public interest in Germany, was 20 times oversubscribed.
The gradual rise in the T-Online share price helped to steady the German stock exchange and restore a measure of public confidence in new technology stocks.
T-Online is the world's largest internet service provider after America Online. It has 5.3m customers, against AOL's 23m, and is some way ahead of Britain's Freeserve.
Ron Sommer, Deutsche Telekom's chief executive, called T-Online the "Daimler of the internet world".
He said investors who did not get shares in the ISP would receive preferential treatment in an upcoming sale of new Deutsche Telekom shares.
Yesterday Hans Eichel, the German finance minister, insisted that T-Online had a strong future.
"It has switched the track in the direction of expansion," he said. "The goal is to become strongly anchored in the international markets, especially in western Europe."
He said Germany was poised to continue strong growth next year and reclaim its role as Europe's economic powerhouse.
"Next year, Germany has the chance to become the growth motor in Europe and Europe overall could take over from the United States as a growth engine," he added.
Financial analysts were somewhat more cautious about T-Online's prospects, pointing out that ongoing deregulation of the German telecoms market would lead to new entrants eating into its market lead, while falling phone bills would further reduce its ability to generate profits.
However the sale of T-Online shares, dubbed "the people's stock", has generated an unprecedented interest in new technology stocks among ordinary Germans.
Surveys showed that about one in five Germans applied for T-Online shares.
But Reinhild Keitel, from the German Institute of Private Investors, played down the company's suitability for private investors, most of whom are used to making long term investments in the country's top 30 blue chip companies.
"Most people expect a steady dividend payment to replace the interest payments from the savings account," he said.
"With T-Online, there is no dividend in sight. T-Online will also be far too volatile to be a people's share."
The German share institute has estimated that more than 5m Germans actively trade in stocks.
Millions more have been buying into equity investment funds as their faith in the federal government's once rock-solid pension scheme has waned.
