Europe’s Zombie IPOs Raise Hopes for a 2020 Resurrection

(Bloomberg) -- This year’s weak market for European initial public offerings would have looked a lot different had companies followed through on their plans to list.

Many companies announced their intention to float, only to change their minds. One of the most high-profile failed IPOs this year was Swiss Re AG’s attempt to list its U.K. business ReAssure in July, scuppered by weak investor demand. British insurer Phoenix Group Holdings Plc this month said it was scooping up the unit for $4.3 billion.

Others are expected to come back and tap the market in 2020, but several haven’t been heard from since. Here is a guide to 2019’s zombie IPOs:

Voyager AIR (Guernsey, investment company)

  • After applying to list on the Specialist Fund Segment on the London Stock Exchange in June, the aircraft leasing firm decided to postpone rather than push ahead. The firm said concerns about liquidity triggered to star asset manager Neil Woodford’s U.K. equity funds had a “larger-than-expected impact on investor sentiment.” It intended to come back to market later in the year, but there has been no news since.

Synsam (Sweden, eye-wear retail chain)

  • The Swedish high-street optician had appointed a six-bank syndicate and was going full-steam ahead with its plans to list in Stockholm before the summer. But private equity owner CVC postponed the sale, which would have been the biggest IPO in Sweden since Munters in May 2017, Dagens Industri reported in June, pointing to volatile markets in the wake of trade tensions. CVC has been mum about whether a float will be revived in 2020.

CM.com (Netherlands, tech)

  • Consumer communication technology company CM.com was the first in a series of IPOs to be withdrawn in the fourth quarter in Europe. It failed to go through, but not for lack of trying as the bookbuilding period was extended twice to pull the listing across the finish line. In the end, investors couldn’t be persuaded to participate, leading the founders to abandon the plan, saying they would continue to execute their growth strategy.

Congatec (Germany, computer hardware)

  • On Oct. 11, the same day as CM.com, another tech company IPO bit the dust. German industrial computer module supplier Congatec first extended its investor education period by a couple of days and reduced its targeted offer size, but decided to postpone ahead of the bookbuilding period. It said it will re-focus its listing efforts to 2020, so this one may come back to market next year.

Logistrial (Germany, property) and Domicil (Germany, real estate)

  • Two German IPOs that never made it to bookbuilding were the proposed offerings for Logistrial and Domicil in Frankfurt. The former, a logistics and industrial property manager, didn’t get the desired feedback from investors, who took issue with the structure of fee payments between the company and its parent, and thought it wiser to push its plans to 2020. Bloomberg reported at the time that the deal could be revived relatively quickly if a cornerstone investor could be secured, so this one could move quickly.

Selecta (Switzerland, vending machine operator)

  • Though this one didn’t make it to the intention-to-float stage, KKR-owned Selecta was broadly expected to happen before the end of 2019. Finanz und Wirtschaft reported in October that 80% of the banking work on the float had been done, which puts the vending machine operator in a good position to be early out of the gates in 2020 if IPO conditions are favorable.

Kaspi.kz (Kazakhstan, fintech)

  • One of this year’s biggest misses was Kazakh fintech business Kaspi’s canceled London listing on Oct. 17. It would have been the largest central Asian financial company to list in London in a decade, but was called off when investor appetite put its valuation near $3.5 billion, below the $4 billion the owners wanted. The timing was unfortunate, as fellow Kazakh lender Halyk Bank sold a 10% stake in the midst of Kaspi’s IPO process, already saturating demand.

Ferretti (Italy, yacht maker) and RCF Group (Italy, audio systems)

  • Oct. 17 was also a bad day for Italian flotations, as two were withdrawn within one day: yacht maker Ferretti and sound equipment designer RCF. Ferretti used every tactic in the book to make the IPO happen: paring the price, reducing the size of the offering and extending the offer period, but to no avail. The cut valuation was too low for the owners to push ahead, though its more premium rival Sanlorenzo did pull off a successful listing this month. There has been no word about whether Ferretti or RCF will try again.

Afreximbank (Africa, export-import bank)

  • Although investors showed a healthy amount of interest in the African Export-Import Bank’s proposed offering in London, volatile markets and uncertainty around Brexit made it think better of pushing ahead. In a statement, the bank said it would “continue to monitor the markets to find the appropriate window to launch its offering.”

DNEG (U.K., visual effects)

  • One day before its shares were due to start trading, DNEG, which produced the visual effects for some of the Harry Potter and Avengers films among others, pulled its IPO. It cited market uncertainty, adding that it got a strong level of interest from investors and will be assessing when to restart its IPO once conditions improve. One investor commented that the deal was “not a bargain” and could have been done at a lower price.

Balboa Ventures (Spain, private equity)

  • What would have been Spain’s first listing this year was halted in November as parent company Arcano postponed a flotation of its technology-focused private equity arm Balboa. As most before it, the reason cited for the suspension was market conditions. There is no news about whether a listing could be revived.

DiaMonTech (Germany, medtech)

  • DiaMonTech, which developed a non-invasive medical device to measure blood glucose levels for diabetic patients, postponed its Frankfurt IPO because of “insufficient oversubscription” in November, saying that the company is “sufficiently financed” as it stands.

SDIC Power Holdings (China, electric power plants)

  • A third foreign-based company was put off by market conditions from floating in London: SDIC Power. It was due to list global depositary receipts on the Shanghai-London Stock Connect segment in December. The listing has been delayed indefinitely.

Summiq (Germany, renewable energy)

  • The last IPO to be withdrawn this year was Summiq, which is building a portfolio of solar and wind power plants in Europe. This was the sixth float to be canceled in Germany, which saw more fail than complete this year. Management decided to call off the offering because of low investor demand and is evaluating other options, including an IPO at a later point in time.

©2019 Bloomberg L.P.

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