(BFM Bourse) – After a dull year in 2022, the results of IPOs in 2023 are not flattering both in terms of the amounts raised and the number of operations. And for the companies that decided to launch this year, their audacity has not really been rewarded.
Already losing momentum last year, the IPO market experienced a big cold spell in 2023.
There were, however, hopes for a resumption of operations in 2023. Unfortunately, this scenario did not materialize at all, according to the latest data from the EY firm which refers to “a contrasting year”. Again in 2023, the market context was not conducive to a renewal of the rating, which was punctuated by investors’ concerns regarding interest rates and inflation.
These fears have spread to the Parisian market, which has only recorded 7 IPOs this year. Six companies tried their luck on Euronext Growth, the compartment dedicated to small and medium-sized companies, while the American cosmetics specialist Coty favored the professional compartment of Euronext, to offer itself a double listing in Paris (in more than that in New York). This specific compartment offers flexibility to foreign companies wishing to acclimatize to the Parisian market, by allowing issuers since 2017 the admission of their securities to a regulated market without issue or sale to the public.
On the other hand, on the regulated compartment of Euronext Paris, it is quite simply a blank year. No operation with a public offer has been recorded since Lhyfe’s IPO in May 2022. In October, the software publisher Planisware was in the process of unblocking this counter and integrating compartment A of Euronext Paris – reserved for capitalizations of more than 1 billion euros – before changing its mind the day before its IPO, citing adverse market conditions.
So many disappointments which explain the low number of transactions, as well as the amounts raised which have not exceeded 300 million euros since the start of the year, EY also recalls.
Osmosun stock market chart of 2023
In this context, how have the new companies that entered the Paris Stock Exchange behaved this year? The results are not very flattering. The number of companies still trading above their IPO price can be counted on the fingers of one hand, including Osmosun, the water desalination specialist which has clearly won the support of investors in 2023, supported by a promising theme, namely the management of blue gold. The stock has gained 24% since its IPO, after seeing its price double in mid-July, in the middle of a heatwave which highlighted tensions over water resources.
Apart from Osmosun, the stock market journey of other companies has not been smooth sailing. The online driving learning specialist Lepermislibre was the first company to inaugurate operations for the year 2023. And its stock market performance is more of an exit from the road than a quiet rise, since its stock loses almost by 70% since its IPO in February. Its introduction was followed in April by that of the Florentaise group, which has lost more than 75% of its value since its IPO.
Here too, the balance sheet is not to the advantage of this company specializing in low-carbon soils, which published very poor accounts for the financial year ended June 30 and whose financial situation is subject to numerous concerns. . Moreover, short of cash and heavily in debt when it presented itself at the door of the Paris Stock Exchange, the group finally painfully raised less than expected last April, during its introduction.
Third stock market entry of the year 2023, My energy broker is limiting the damage to date with a decline of less than 20% since its first stock market steps at the end of May. For this Bordeaux company specializing in energy brokerage for professionals, it is not the operational performance that is questioned by investors, it is just a victim of investors’ aversion to small and mid-caps.
For its part, Vinpai has lost 16.7% since its IPO in July. The specialist in natural ingredients for the food industry and cosmetics first attempted to launch on the stock market in June 2022, before turning back in the face of adverse market conditions.
As far as Stif is concerned, we will give ourselves a little more time to return to this operation during a future review, the company having taken its first steps on the stock market this week. But the inaugural session was convincing, with the stock gaining nearly 9% for its first day of trading on Wednesday, December 20. To see if this trend will be confirmed with compliance or not with the roadmap announced during the IPO.
To simplify the graph below, we have chosen to focus only on companies that have made a public offering and to exclude private placements and direct listings.
Variations stopped at the close of 12/21/2023
A credible stock market story
In view of this more than contrasting year 2023 for newcomers to the stock market, a question arises: how to succeed in your introduction and then have a good stock market performance? Simple answer: keep your (beautiful) promises.
At the time of the IPO, the company must in fact offer investors a clear vision over 3 to 5 years, recalls Nisa Benaddi, partner at EuroLand Corporate. To maximize the chances of a successful stock market story, she recalls that companies must ensure that they announce a clear development project in a promising market segment which is supported by involved management, including capital. And the more the promises made at the time of the IPO are kept, “the more investors will maintain their confidence in the company, or even strengthen it, and new ones (investors, Editor’s note) will join the capital”, recalls the specialist.
If we now broaden the magnifying glass not only to the year 2023 but to all IPOs of small and medium-sized stocks since 2021, only a handful of companies have since managed to achieve a positive performance.
To simplify the following graph, we have also chosen to focus only on companies that have made a public offering and to exclude private placements and direct listings.
Variations stopped at the close of 12/21/2023
“If we look at the IPOs that have taken place in recent years, 5/6th of the companies are trading below their IPO prices, which tends to demonstrate that they were listed at too high a price. And the more you small beings, the greater the probability of experiencing a drop after the introduction”, specified Pascal Quiry in a previous article devoted to the underperformance of small and mid-caps on the Parisian market.
“Any disappointment can generate investor distrust and create the conditions for a gradual fall in the share price. In such a scenario, it will be more complicated for the company to attract investors, or even to raise funds under good conditions. “, adds Nisa Benaddi.
Despite everything, the Stock Market remains a fantastic way for businesses to finance themselves. However, “market conditions” – systematically called into question when the operation does not succeed – do not alone sum up the failure or success of an operation. It is indeed the conditions offered to investors (requested valuation multiples) which ultimately guarantee or not the success of the project.
Sabrina Sadgui – ©2023 BFM Bourse
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