New Stocks Hit Rough Patch as Global Funds Step Back From Market

(Bloomberg) -- A banner year for new stocks in Europe has hit a rough patch, with listing candidates struggling to drum up demand or holding out for better conditions. 

Rubix Group Holdings Ltd, a provider of maintenance and repair for industrial firms, pulled a planned London listing on Tuesday, becoming the latest in a string of failed deals across Europe. Others, such as Italian automotive sales technology startup MotorK, are trying to get to the finish line by lowering their valuation expectations. 

Volvo Car AB, which raised $2.3 billion in Stockholm on Friday in one of biggest European listings of the year, cut the size of its offering by a fifth and priced it at the bottom of the original range. Companies are struggling to attract investors as global buyers become more selective amid risks from energy and supply chain crises and rising inflation.  

“Big Tier 1 global funds have stepped back from the market,” said Andreas Bernstorff, head of European equity capital markets at BNP Paribas SA. “A lot of deals didn’t launch as a consequence of weak investor response during the ‘early look’ phase. And the deals that are getting done are smaller and cheaper.” 

It’s not just IPOs. Large funds are also offloading their stakes in already-listed companies at a faster pace to lower risk in their portfolios. BlackRock Inc., the second-largest shareholder in U.K. online shopping emporium THG Plc, sold nearly half its stake this week after the stock dropped in October.

An Apollo Global Management Inc. fund exited its stake in French bottle maker Verallia SA Tuesday evening, while cybersecurity firm Darktrace Plc saw holders sell shares for the second time in less than a month.

“For all this talk of global markets, global investors can become flighty when markets get difficult, and it is the smaller investors making individual decisions in their markets that may prove critical,” said Bernstorff.

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