Italy Targets Comeback for IPOs After Listings Cratered in 2020

(Bloomberg) -- What a difference a year makes. After Milan finished 2019 as Europe’s top venue for new listings, highlighting Italy’s wide array of family-owned micro businesses, the market for IPOs in the country cratered this year as investors shied away during the pandemic.

Following a year that saw 35 initial public offerings worth $2.9 billion, only 15 companies have gone public in Milan in 2020, raising just $745 million, according to data compiled by Bloomberg. Even with three initial public offerings underway, Italy is behind the U.K., Sweden and Norway in number of deals.

“Compared to other countries Italy has definitely suffered more this year on the IPO side,” said Marco Daviddi, head of strategy and transactions for the Mediterranean region at EY. Deal activity on the AIM market has picked up in recent weeks, however, and “there’s also a pipeline of deals coming up, so we expect to see a good flow of IPOs in the first part of 2021.”

READ: The Biggest IPO Pops Come from Europe’s Busiest Venue: ECM Watch

Business conditions in 2020 have played against Italy’s traditional strengths -- small and medium-sized companies in sectors including manufacturing, consumer and retail. These categories have “suffered more in the context of the pandemic,” Daviddi said, while technology, health care and industrials have dominated global IPO activity this year.

Of the companies going public in Milan this year, GVS SpA was the only one admitted to trading on Borsa Italiana’s main MTA market. The maker of biohazard masks and filter components for ventilators has surged 79% since its June IPO.

Milan-based bankers point to a pick-up in activity from June as a positive sign for next year. “Most of the deals have come in the second part of the year and have done quite well,” said Massimo Gionso, chief executive officer of CFO SIM SpA. “In the coming months, we expect a lot of action with many IPOs already at the starting line.”

Upcoming Listings

Antonio Amendola, portfolio manager at Acomea Sgr SpA, said next year “could be better than 2019 in terms of IPOs as there are many positive catalysts ahead,” including an improving economy and relief from the the European Union Recovery Fund, with Italy set to get the biggest share. Several companies have already queued up for listings:

• Comal SpA, an installer of solar power systems, expects to start trading on the AIM market Dec. 16. “We have seen significant growth in the past three years and decided to go public to raise funds and further support development plans,” CEO Alfredo Balletti said.
• Massimo Mauri, CEO of Seco SpA, confirmed the “Internet-of-things” solutions provider’s timetable for an IPO in the first part of 2021. “We stand by our plans as the company is doing very well,” Mauri said. “We’re in a sector that’s been accelerated by the pandemic.” Digital solutions for the medical and pharmaceuticals industries account for about 40% of revenue, and the company has developed a non-invasive pulmonary ventilator.
• Biotech company Philogen and LimaCorporate, a reconstructive medical device specialist, may also hold IPOs next year, daily Il Sole 24 Ore reported. Philogen said a listing is an option it’s considering, while LimaCorporate declined to comment.

Still, the country’s IPO market has so far lacked a big name to take it to the next level. While well-known brands like Valentino Fashion Group and food-market and restaurant specialist Eataly have periodically been linked to future listings, neither has announced any plans.

That’s relegated Milan to hosting mainly microcap IPOs over the past two years. Of the 2020 listings, 12 raised less than 10 million euros ($12 million), the data show.

Next year should see “a return to IPOs for more traditional sectors like automotive, luxury and travel,” Gionso said. “It would be nice to see some big, weighty names among Italian corporates listing on the market and a few more companies on the main MTA segment.”

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