Wirecard to be pulled from Dax, crowning spectacular fall from grace

The German bourse has changed its rules to remove Wirecard from its blue-chip index ahead of a scheduled September review of constituents. Photo / AP

Wirecard is to be deleted from Germany's blue-chip Dax index, weeks after the payments provider's spectacular collapse into insolvency following the revelation of a long-running fraud.

Once the country's most celebrated financial tech group, Wirecard was first promoted to the Dax — which contains Germany's 30 leading companies — in 2018, when it replaced the ailing Commerzbank.

But following persistent reports of accounting irregularities, the Aschheim-based company admitted in June that €1.9 billion ($3.4b) of cash was missing, causing its shares to lose almost all of their value in a rapid fall from grace.

At its height, Wirecard stock traded at almost €200, but it will leave Germany's prestigious index with its shares worth little more than €1 each.

Although Wirecard filed for insolvency soon after its admission, Deutsche Börse, which runs the Dax, was not scheduled to review the index's constituents until September.

Facing pressure from investors, the group pushed through a rule-change to allow it to remove Wirecard earlier than planned. From now on, Deutsche Börse will be able to remove a company within two trading days of it filing for insolvency.

The company also pledged to conduct an "in-depth review" of the Dax's rules.

Berlin-based Delivery Hero, which has benefited from a surge in orders for takeaway food during the Covid-19 pandemic, will take Wirecard's spot in the Dax from Monday, despite doing no significant business in the country.

The start-up, founded nine years ago, first went public in 2017, and now operates in more than 40 countries across Europe, Latin America, Asia, the Middle East and north Africa.

However it has yet to post an annual profit, and sold its German brands, including Foodora, Lieferheld and Pizza.de, to Dutch competitor Takeaway.com last year.

"Entering the Dax is an acknowledgment that the capital market believes in our platform," said Niklas Östberg, Delivery Hero's chief executive and co-founder.

In July, Delivery Hero raised its full-year revenue guidance by about €200 million, or roughly 8 per cent, as orders in Asia, its largest market, almost quadrupled during the coronavirus crisis. Sales in Europe were also up by 47 per cent.

The company is the second Berlin-based business to ascend to the Dax this year, after property group Deutsche Wohnen took Lufthansa's spot in June.

Wirecard's removal from the Dax leaves the index with just one pure software constituent, the enterprise tech giant SAP, which was founded almost 50 years ago.

Wirecard will also be removed from the TecDAX index.

Written by: Joe Miller

© Financial Times