(BFM Bourse) – Inflationary pressures and rising interest rates are complicating the emergence of future “tech” nuggets. Despite less favorable financing conditions, going public remains an essential step in the life of these companies.
A new stage in their rapid growth as much as a test, the IPO remains the focus of European “tech” companies, despite demanding investors and a hectic first half on the markets.
There is “a real phenomenon of a technology renewed and conquering European Union, financed more and more via the financial markets”, explains Franck Sebag, partner of the consulting firm EY. Street.
But the potential is there. According to the latest “Titans of Tech” report by specialist firm GP Bullhound, after years of unbridled growth, the “tech” sector of the Old Continent had 283 unicorns (companies valued at more than a billion dollars) in 2021, including some already listed.
For the boss of Euronext, a pan-European stock market operator, Stéphane Boujnah, the sector has “sufficiently strong growth prospects to go public in several companies”.
His group launched in early July a technology index bringing together more than a hundred companies, “Euronext Tech Leaders”, in order to give investors more clarity.
93% drop in unicorn prices in Europe
After record figures in 2021, the number of listings in Europe made by unicorns fell by 93% in the first half of 2022 year on year, from 54 to 4, according to the firm EY. It must be said “that 80% of listed companies are now below their original price” over the past three years, notes Franck Sebag. And the fate reserved for IPOs is variable.
The French music streaming platform Deezer, for example, has lost more than half of its value since its arrival on the Parisian coast in early July.
On the other hand, the French data host OVHcloud (defender of the development of a European market able to compete with American and Asian players) resisted. Valued at more than 3.5 billion euros when it entered the market in the fall of 2021, the company was worth just over 2.9 billion at the end of July 2022.
Despite the upheavals, the fact that many “tech” companies have gone public in recent years is “an excellent signal”, which shows that our sector is “gaining in maturity”, considers Yann Leca, financial director of the unicorn OVHcloud.
“It is indeed the sector of technology which tomorrow will irrigate the Stock Exchange”, assures Franck Sebag while Stéphane Boujnah believes that despite the circumstances, “it is this sector which will continue to produce the most growth”.
“The strongest will hold and the others will not”
So why this reluctance of the markets? “The” tech “companies have benefited for several years from massive influxes of capital”, recalls Maximilien Monot, portfolio manager of Monocle AM and this period of “easy money”, seems to be over.
The crisis that stock prices are going through due to the particularly deteriorated macroeconomic context “brings us into a new Darwinian cycle where the strongest will hold on and the others will not”, sometimes due to a lack of ability to hold their objectives once they enter the stock market, develops-t -he.
“I am not worried about the results of these companies, which often have good growth but more of their very high stock market valuation levels” and out of step with their activities, underlines Mr. Monot.
Adyen, the Dutch specialist in online payments which went public in 2018, posted an annual profit in 2021 of 470 million euros while its valuation, the largest of European companies, currently exceeds 55 billion euros. euros, a gap far too large according to the Monocle analyst.
“Investors will be very selective in choosing companies” from now on, underlined during a meeting with the press in early July Jacques-Aurélien Marcireau, in charge of technological investment at Edmond de Rothschild AM.
“If you are a somewhat ambitious European company with real leadership, now is your time,” he said, considering that in these eyes “the entrepreneurs of the technology Europeans have never lived on free money and are culturally more seasoned with the current environment” than their American counterparts.
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