Increase in European IPOs raises expectations for a much needed recovery

Rising IPO Activity in Europe

There’s a noticeable uptick in initial public offerings (IPOs) across Europe, sparking optimism for a broader wave of public listings, even as investors still show a preference for private markets.

A variety of companies, spanning sectors from fintech to defense and software, are either appearing on the scene or are rumored to be eyeing IPOs in the European market.

Just last week, Aumovio, a company specializing in auto parts, and Swiss Marketplace Group made their debuts, with their stocks now listed on the Frankfurt and Swiss Stock Exchanges, respectively.

“September’s IPO activity stands out as a quarterly highlight, with both issuers and private equity viewing it as a viable exit route in Europe once again,” remarked Phildlake, the head of UK equity capital markets at Bank of America in London.

“We’re experiencing a level of activity similar to what we encountered in the last year and a half,” Drake noted in an email to CNBC. “Conversations about IPOs are increasing, and activity in secondary markets remains strong.”

Christoph Tonini, the CEO of Swiss Marketplace Group, emphasized the opportunities for existing shareholders. “The best way to benefit from growth is to invest in a publicly traded company,” he explained. “That’s why all our shareholders remain invested—they want to grow alongside us.”

The online advertising firm set its stock price at 46 Swiss Francs ($57.84), giving it a valuation of approximately $5.7 billion. By the end of the week, shares had risen to CHF 49.

Meanwhile, Aumovio entered trading with a market cap of $4.14 billion at 35 euros ($41.11), concluding the week above 39 euros. The company’s recent rollout coincides with two imminent IPOs in Sweden.

Verisure, a Swiss security firm backed by private equity, plans to launch its IPO at 3.1 billion euros on Nasdaq Stockholm this week. “We want to reach a stable position that supports long-term debt repayment,” Larry mentioned in an update to CNBC.

Additionally, Nova, a Swedish digital banking group, is making strides with its intentions of entering the market at $3.7 billion.

Private versus Public

The recent surge in listings follows a lengthy slump in the European IPO landscape.

From January to August this year, North American IPOs raised an impressive $17.7 billion across 153 transactions, while Europe managed just $5.5 billion from 57 offerings, according to FactSet data.

“Clearly, the levels of IPOs have drastically decreased,” noted Henrimarku, Tikehau Capital’s deputy CEO. He contrasted the minimal public offerings with an escalating appetite for private assets, both from individual and institutional investors.

Some German pharmaceutical companies, like Stada, recently scrapped their IPO plans in favor of private sales. Despite this, Drake at Bank of America observed that investor sentiment towards listings is improving.

The primary factors fueling this rebound appear to be lower market volatility and stronger dollar-based returns on European equity investments, attributed to the currency fluctuations between the euro and the dollar.