Punching above its weight - Benelux hopes to continue IPO outperformance

Data Insight ECM Explorer 2 August

Punching above its weight - Benelux hopes to continue IPO outperformance

The Benelux region has been on an upwards trend in Europe’s equity capital markets over the past few years.

Amsterdam has become a major European IPO hub, cultivating a pipeline of local and international listing candidates, and Brussels is fast becoming a lively exchange for new listings.

But the challenges of war in Europe and the foothills of a global economic recession, has hammered deal volume with issuance in Benelux falling from EUR 13.2bn grossed across 28 deals last year to just EUR 414.8m stemming from two IPOs this year. The two deals were SPACs: GP Bullhound Acquisition I SE, which listed in Luxembourg and raised USD 221m in February, and the USD 230m listing of RA Special Acquisition Corp in Amsterdam in May.

Despite the market malaise, several companies are lining up listings, particularly in the tech sector. The pipeline features e-commerce platforms like Bol.com, Coolblue, eShopWorld, but it is also being eyed up by giant conglomerates such as Coca Cola Beverages Africa. The exchange has built up some considerable momentum after hosting the EUR 2.6bn IPO of coffee conglomerate JDE Peet’s [AMS JDEP] in 2020 and the EUR 2.16bn listing of fund platform Allfunds [AMS:ALLFG] in 2021.

Sources say the development of the exchange has been a huge boon for Amsterdam and proof that a traditionally smaller exchange can punch above its weight.

“It is such a small country, but its global standing has been growing and it is now seen like an efficient, neutral venue,” a banker said. “It sits in a time zone right in the middle of the US and Asia, which is helpful for business. And it is part of the European Union, meaning you can benefit from its advantages while enjoying a stock market that has a pragmatic approach to business without a massive rulebook.”

The exchange is part of Euronext, meaning it also has a shared order book with other EU exchanges; the market is liquid; and it boasts high numbers of specialist research analysts, the banker added.

Several companies have also priced IPOs in Belgium in the past few years, included the bumper EUR 880m listing of chemicals service provider Azelis [EBR: AZE] last year.

Issuers in Belgium have often opted to structure deals as primary transactions in which all proceeds are devoted to the further development of early-stage products and the build-out of start-up corporate structures, an adviser said.

Advisers in the market are now keeping an eye on companies such Cegeka, a fast growing IT company that is described as keen to attract more capital and in the last financial year recorded revenue of EUR 774m. Summit Partners-backed open-source software development company Odoo is already seen as an IPO candidate as well, though the company has been leaning toward private rounds of funding, as reported.

At a slightly more advanced stage is Forum Estates, a major investor in small supermarkets, which, as this news service reported, has enlisted two banks to advise on an IPO, though market conditions mean that it is unclear when the listing will go ahead.

It planned to be listed on Euronext Brussels before the end of 2022, but there is still uncertainty on timing because the company does not want to concede too much on valuation.

Different exchanges, common problems.

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