Traditionally, the first quarter is not very active in terms of initial public offerings (IPO). This is even truer this year. Suffering from an unfavorable basis of comparison, questions about valuations in a context of rising interest rates and inflation and the war in Ukraine, the IPO market looked downright gray on the Old Continent. Between January and March, European markets totaled 2.7 billion euros in issues with 28 IPOs, compared to 23.1 billion euros raised for 89 IPOs in the same period in 2021, according to the latest Watch Europe study from the consulting firm and PwC audit. That is falls of 88.3% and 68.6% respectively. The largest operation was that of the oil group Vår Energi, majority owned by the Italian hydrocarbon giant Eni, on the Oslo Stock Exchange.
The quarter was marked above all by a new phenomenon: the rise in power of Special Purpose Acquisition Companies (SPAC). ” Four of the eight biggest deals were SPACs, raising €753m across the three different hubs of Frankfurt, London and Amsterdam, and operating in a wide range of sectors including technology, fintech, video games and green energy », Details PwC.
Uncertainties
In France, the IPO market remained stable with a low volume: a single operation on Euronext and two on Euronext Growth, for 111 million euros raised in all. ” Transfers to Euronext Growth continued in the first quarter of 2022 with no less than seven transfers recorded, thus reflecting the wish of certain issuers to move towards a less restrictive market adds PwC. In London, a usually dynamic place, experts also note a slowdown in IPOs, with only 10 operations totaling 0.4 billion pounds sterling, against 21 IPOs and 7.3 billion pounds sterling in the first quarter of 2021.
What next? At this stage, it is still difficult to predict the return of the appetite for IPOs. Despite the liquidity that investors retain, the inflationary risk, combined with the increasing selectivity of operators, who are looking for companies that are resilient, promising and respectful of ESG criteria, makes the IPO market very uncertain.
PC