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European companies are delaying plans to list on local stock exchanges as investor concerns about market conditions could stifle a recovery in new listings.
French software group Planisware on Wednesday halted plans for a Paris listing that would have been the largest in two years, with its chief executive blaming “extremely cautious” investors.
It marks the latest European launch plan to be scrapped, after German military contractor Lenk abandoned a listing last week. Another German company, toll payment provider DKV Mobility, has also postponed plans to go public until 2024, according to a person familiar with the matter.
The delay marks a further blow to Europe’s moribund new issue market, which has fallen to its lowest level since the 2008 financial crisis.
A string of weak European macroeconomic data has many investors worried that the continent is destined for a period of stagflation – a toxic combination of stagnant growth and high inflation. The euro plummeted against the dollar, and industrial production in European powerhouse Germany fell sharply.
“We’re done this year,” a European banker familiar with the market said, adding that they expected further listings planned for this year to be delayed.
Planisware has issued more than 15 million ordinary shares at 16 to 18 euros each ahead of the Paris listing, a deal that would value the company at between 1.1 billion and 1.25 billion euros.
However, CEO Pierre Demonsant said, “The recent deterioration in market conditions has prompted investors to be extremely cautious.”
Demonsant’s comments echo those of German gearbox maker Renk, which listed on the Frankfurt stock exchange last week. “Market conditions have become decidedly cloudy over the past few days,” the company said at the time.
DKV originally planned to seek a listing valuation of more than 4 billion euros this month, but the listing was delayed due to market conditions, people familiar with the matter said. DKV did not immediately respond to a request for comment.
Planisware, Renk and DKV are all backed by private equity groups Ardian, Triton and CVC respectively, with the latter having been planning to list on the stock market later this year. These financial investors are under pressure to exit their investments to return cash to their backers.
However, some say the failure of the deals, despite the success of German pharmaceutical vial group Schott Pharma in late September, highlights wider problems plaguing the European IPO market.
Craig Coburn, former global head of equity capital markets at Bank of America, said the “real issue” was the depth of the local market.
“European IPO investors don’t want to be stuck in stocks if liquidity dries up. European stock markets don’t have enough depth to sustain IPOs for companies with valuations between 1 and 2 billion euros,” he said.
Across the Atlantic, the tech IPO market fared slightly better.
German sandal maker Birkenstock is set to go public in the United States on Wednesday in what would be its third-largest U.S. listing this year. Shares in chip designer Arm rose by a quarter on its first day of trading in mid-September but have since fallen about 8%. The company chose New York over London.
Svlook
