IPO Bonanza Seen Next Year in Europe With Rush in Tech Firms

Initial public offerings in Europe look set for a strong start to 2021 as rallying stocks support a line-up of highly anticipated deals, with blank-check listings also starting to gain traction.

Thanks to a late-year surge of offerings in Europe, IPO proceeds raced past those in 2019. Now, gains in equities are boosting expectations that listings will continue to snowball come January, with tech startups Deliveroo and OVH Groupe SAS planning to make their debuts in 2021.

“There have been few periods in history with as much liquidity for equity capital market transactions,” said Aloke Gupte, co-head of equity capital markets for Europe, the Middle East and Africa at JPMorgan Chase & Co. “We expect 2021 to be a more active year, with IPOs coming back to market in full force,” he said.

Sectors that benefited in the coronavirus outbreak, like e-commerce, technology and life sciences, will continue to tap the market, while the anticipated recovery in industries hurt by the pandemic could also lead to listings, said Darrell Uden, global co-head of ECM at RBC Capital Markets. “As much as investors are looking for growth, in Europe they are also seeking yield.”

Although it is common for owners to simultaneously explore a listing and an outright sale of a business, the balance seems to be shifting in favor of equity markets. “The bull market has visibly made an IPO the most attractive exit route,” Gupte said.

And one of the trends that has helped drive U.S. IPOs to a record high is starting to make headway in Europe: special purpose acquisition companies. After French billionaire Xavier Niel floated a SPAC in Paris this month, Lakestar is said to be preparing its own blank-check listing in Frankfurt.

“There has been a dramatic shift in the buyer base for these vehicles and there is a huge number of European investors looking at these offerings,” said Henrik Johnsson, global co-head of capital markets at Deutsche Bank AG.

Here are some listings to watch out for in 2021:

1. Germany

After two years of sluggish activity, Frankfurt is gearing up for some of the biggest anticipated deals in 2021. Vodafone Group Plc is on track for a first-quarter listing of its Germany-based Vantage Towers unit, an IPO that could raise about 4 billion euros ($4.9 billion), Bloomberg News reported in November.

Private equity firm EQT AB is planning to list or sell at least two German assets next year, Bloomberg News reported the past two months: cybersecurity company Utimaco GmbH and enterprise software developer SUSE. SoftBank Group Corp.-backed online used car retailer Auto1 Group GmbH is also said to be seeking about 1 billion euros in an IPO.

2. France

Paris may have hosted only a handful of listings this year, but some of its biggest public companies are planning major overhauls that could put billions of dollars of new stock on the block.

French utility Engie SA is said to have lined up banks to explore options, including an IPO, for some service businesses that it is valuing at as much as 5 billion euros ($6 billion). Sanofi, meanwhile, could list its drug ingredients business for as much as 2 billion euros, Bloomberg News reported in July.

Beyond deals from its doyens, France may see one of its tech startups go public in 2021. OVH, a cloud-computing provider, is said to be preparing for a flotation early next year.

3. London

Although London managed to hold on to its pole position for listing venues in Europe, sizable IPOs by British companies have been scarce on the ground. Now, with a potential resolution to Brexit in sight, one way or another, local firms are expected to make a cautious return.

U.K. food-delivery startup Deliveroo is said to be exploring a IPO next year, thanks to the popularity of takeout meals amid coronavirus-induced lockdowns, while cybersecurity company Darktrace Ltd. is said to have hired banks to go public in the City.

Other domestic companies are also seen to be preparing stock-market debuts. EQT-owned veterinary group IVC Evidensia, online reviews platform Trustpilot and Eight Fifty Food Group, which owns seafood brand Young’s, have all picked banks to advise on listing plans, Sky news reported. IVC Evidencia and Eight Fifty Food did not respond to requests for comment. Trustpilot declined to comment.

4. The Nordics

Nordic countries provided most of the IPO action this year, with a seemingly never-ending stream of small offerings well into December. A number of billion-dollar share sales are already in the works for next year.

The most closely watched of them all is Sweden’s Klarna AB, a payment provider for online shoppers, which offers buy now-pay later services. A September funding round put its value at $11 billion, though it may opt to list New York.

Another Swedish company, Epidemic Sound AB, is said to be mulling a sale or IPO that could value the music licensing business at more than 1 billion euros. And Stockholm-based pest control business Anticimex could be listed with a valuation of at least $5 billion, Bloomberg News reported last month.

Beyond Sweden, Stark Group A/S, which traces its roots back to a small timber yard in late 19th century Denmark, could fetch about 2.5 billion euros, with private equity backer Lone Star Funds said to be exploring options for the building-materials retailer.

5. Spain

Madrid hosted a lone listing this year, but the outlook for 2021 is brighter for the exchange. Telefonica SA is said to be weighing a fresh attempt to float its wireless towers unit Telxius, after scrapping a planned IPO in 2016 amid low valuations.

And fund administration platform Allfunds is said to be planning a stock market debut, though it’s unclear where the company will list and the business has recently drawn takeover interest from suitors including Deutsche Boerse AG. Owner Hellman & Friedman could seek a valuation of as much as 7 billion euros to 10 billion euros for the company.

©2020 Bloomberg L.P.

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