A fare exchange: Online retailers are queuing up for IPOs

31 August

A fare exchange: Online retailers are queuing up for IPOs

The online shopping boom of the past 18 months has e-commerce groups queuing around the corner at stock exchanges waiting for their ticker symbols.

These companies have claimed 16% of all European IPO proceeds thus far this year as well as 8% of listings by number, with US$9.6 billion raised across 26 deals. That's around three times more deals than seen last year, when eight issuers raised US$5.3 billion—albeit with 22.3% of 2020’s total IPO proceeds as e-commerce quickly became a standout performer in pandemic-restricted economies.

Returns to sender

Even recent market jitters over stimulus tapering have failed to derail these floats. Online retailers that debuted across the continent so far in Q3 are, on average, trading 22.6% higher since listing. E-commerce groups that have come to market in 2021 were on average trading 14% higher than their listing price as of 20 August.

Understandably, this has private businesses heading for the bourses. The Very Group, a UK multi-brand online retailer, is said to be working with Barclays, Morgan Stanley and UBS in preparation for its IPO, following in the footsteps of The Hut Group and Made.com.

In Germany, online car parts retailer Autodoc is said to be prepping a Frankfurt listing with a valuation of as much as €10 billion, while Dutch e-commerce giant Coolblue could pursue an Amsterdam float in the second half worth up to €4 billion.

Angle for farthings

Investors are willingly opening their cheque books but will be discerning shoppers looking for just the right fit, even if it's simply a leading foothold in a geographic market. What made The Hut Group's IPO so appealing was that it offers its B2B customers direct-to-consumer solutions, at a time when big name brands are looking to cut out the middleman and enrich their customer data.

For The Very Group, it benefits from its positioning as both an online retailer and a financial services provider. Its underlying brands, which include Very.co.uk and Littlewoods.com, offer flexible and interest-free payment plans, a draw for cash-strapped consumers.

As shoppers return to Europe's high streets in search of a dose of retail therapy after months of protracted lockdowns, e-commerce groups will have to retain customers and develop defensive qualities in their business models. Without this, investors might think twice before adding to basket.

What’s next? Pipeline of potential e-commerce IPOs 

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