For Every Pulled IPO, Two New Deals Hit Europe’s Crowded Market
(Bloomberg) -- This year’s initial public offering boom in Europe is facing its biggest test yet, with billions of dollars in deals coming to market while failed listings and flops pile up.
Nearly 20 companies have kicked off listings in Europe this month, with Swedish automaker Volvo Cars leading the pack. Four new share sales, including that of electric-vehicle charging firm Pod Point, launched on Monday alone. Yet, IPOs worth billions of dollars have also been called off in recent weeks, including German language app Babbel’s.
With investors getting so many IPO pitches at once, it pays to stand out. Companies in popular sectors, particularly if underrepresented in public markets, and those that have carefully gauged prospective buyers’ interest and pricing expectations are at an advantage.
“Investors have appetite for high-quality assets that have a distinctive story,” Aloke Gupte, co-head of equity capital markets for Europe, the Middle East and Africa at JPMorgan Chase & Co., said in an interview. “Even if there is short-term volatility, investors will continue to take a long-term view.”
The gap between what is hot and what is not is widening. Caller-identification app Truecaller AB surged in its Stockholm trading debut Friday, while Czech digital toll-road payments firm Eurowag priced shares below the range at which they were originally marketed, with the new stock sliding in its opening session in London.
More than 40% of the largest deals in Europe this year are now trading below their IPO prices, as investors turn cautious on highly valued companies.
“Unless we see clear assurances of participation from the investor names we want to be at the top of the shareholder register, it can be good advice for some issuers to wait it out,” said James Palmer, head of equity capital markets for EMEA at Bank of America Corp.
Some have already opted to delay going public and avoid the logjam. Virgin Atlantic Airways Ltd. has slowed plans for a London IPO and may make its case to investors in 2022, Bloomberg News reported in late September.
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