Germany, the strongman of Europe, has had a weak IPO scene for longer than many can remember, but that has taken a sharp turn this year. After a two-year dry patch, the value of public offerings has surged to €6.3 billion—a figure last topped in 2018, itself an outlier year.
Indeed, once Siemens Healthineers' £4.2 billion offer is stripped out of the data for 2018—the largest IPO in Europe of that year—Germany's renaissance is even more striking. You would have to go all the way back to the dot-com boom of 2000 to find a better year. And we're only a few months into 2021.
Great and small
German companies are benefitting from strong investor demand for new equity offerings, meaning IPOs are coming in all shapes and sizes. Online car exchange Auto 1 kicked off proceedings with a €1.8 billion listing priced at the top end of its range, accounting for nearly a third of the year-to-date's value, with the issue flying off the shelves.
Others were less fortunate: Laboratory services group Synlab had to price its IPO at the bottom of its price range due to limited appetite.
Even the SPAC craze has made a tentative appearance in Germany, with Berlin VC firm 468 Capital and OboTech raising €500 million between them in private placings on the Frankfurt Stock Exchange to make technology acquisitions.
Frankfurt is Europe's financial capital but by and large the city is a banking centre. There has never been a strong stock culture in Germany, where risk appetites are low. Pension funds have a higher weighting towards fixed income than equities, with the opposite portfolio balance seen in countries like the UK and the US. Inevitably, this means that resources and infrastructure are limited.
When Mainz-based BioNTech, developer of Pfizer's COVID-19 vaccine, decided to float in 2019, it opted for the Nasdaq. The biotechnology company was drawn to the deeper investor liquidity and analyst coverage on offer across the Atlantic. But with so much activity in the US right now, it is increasingly difficult to stand out from the crowd.
European companies with stories that resonate at home are therefore choosing local bourses, riding the wave of investor appetite while it lasts. And Germany is just the latest beneficiary.
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