It’s the hope that kills you. As European ECM bankers returned to their desks post-summer, tanned and cheery, they dreamed of an IPO revival. Cancellations of two big Autumn deals, though, mean the nightmare continues.
The postponements of Germany’s Renk and France’s Planisware IPOs, worth a combined USD 690m in deal volume, is not a disaster but it shows Europe’s IPO troubles are far from over.
The volume of pulled deals in 4Q is lower than in 2Q, driven by the cancellation of the USD 800m listing of Turkish Soda Ash company We Soda, but the disappointment is likely higher. The Turkish issuer pulled the deal before even opening books, because investors weren’t willing to give it the valuation it wanted.
Both Planisware and Renk had passed that hurdle and had arrived at palatable valuation ranges, or so they thought, having even shared final pricing messages, with ‘oversubscribed’ books. But even then, the books were not deemed high quality enough to go ahead.
We Soda was one of four IPOs to attempt to price a listing in the traditional pre-summer window and the three other listings - Thyssenkrupp Nucera [ETR:NCH2], Hidroelectrica [BUC:H20] and CAB Payments [LON:CABP] - all succeeded, pointing to a success rate of 75%.
Of the three large European IPOs launched in September, only one - Schott Pharma [ETR:1SXP] - was completed, an ominous success rate of 33.3%.
For an IPO window that started so optimistically, with bankers previously telling this news service about the best investor engagement they had seen in two years, it looks like 2023 will end on a whimper.
Looking nervously ahead
Europe’s equity capital markets bankers will be crossing fingers and toes that conditions improve for an early 2024 IPO window, as there are some big names already being floated.
The potential stars of 1H24 are Renault’s Ampere, Douglas, Flix Mobility, DKV Mobility and the perennially delayed listing of Swiss skincare company Galderma, according to previous reports by this news service.
In addition to these large names French tech unicorns Contentsquare and Doctolib are also said to be prepping for a listing next year. Doctolib has a score of 54 out of 100, according to Mergermarket's Likely to Exit (LTE) predictive algorithm.*
An ECM banker pointed to a stream of potential “good equity stories” that could make the early part of next year more palatable for IPOs.
He added that an uptick in RFPs for companies exploring an exit is taking a lot of his team's focus, showing that issuers are still engaging with listing possibilities. Many banks eagerly talk up early-stage discussions with issuers teeing up deals.
While accelerated trades have sustained bank volumes this year, they offer little revenue to compensate for the lack of IPOs.
There is still some optimistic talk of private equity firm CVC riding to the rescue on a white steed with a bag full of IPO fees before the year is out, although some bankers this week doubted whether the sponsor would risk a launch in a clearly troubled market.
Europe’s ECM has heard positive talk before. The IPO market at the end of 2023 feels a little like Monty Python and the Holy Grail’s famous Black Knight, who consistently protests his willingness to fight on as all his limbs are lopped off.
It’s a feeling that IPO market practitioners can relate to.
