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Analysis-Europe’s record IPO year has a sting in its tail By Reuters


© Reuters. FILE PHOTO. The skyscrapers of New York’s Financial District disappear as COVID-19 spreads. This is despite an extended lockdown. A request by the German government to have more Frankfu home offices made, the city was left in a state of flux.

Abhinav and Oliver Ramnarayan

LONDON (Reuters – Europe’s record for first public offerings (IPOs), is in danger of coming to a halt due to inflation fears and worries over a potential property crisis in China.

The screens have been filled with deals cancellations and postponements, including those from France’s Icade Sante or Switzerland’s Chronext.

Czech company Eurowag pushed through a London IPO reduced in size Friday. But the stock of trucking services firm Trucking Services Group fell 10% off its 150 pence price offer.

Companies that were listed in 2012 are now trading at a lower price than their IPO prices. The Renaissance IPO Index, which tracks the Europe, Middle East, and Africa regions, is down 9.19% this year.

Christoph Lang, J. Safra Sarasin’s head of core equities Europe, stated that investors are more wary of rising interest rates and inflation, along with uncertainty about China. The Goldilocks-like environment that we enjoyed for the past twelve months has ended.

Peleton’s rival iFIT dropped its IPO plans while Life Time’s shares opened 8% lower than their original offer price.

Contrast this with the first nine month of 2021 when listings surged at their highest levels since 2000’s dotcom boom. This was based on data from Refinitiv. However, the pace picked up in the third quarter.

Investors’ risk appetite is closely reflected in the IPO market. If there are signs of stress, they will be less inclined to invest large sums of money to one company.

Stock markets around the world have been hit by uncertainty over Evergrande, a heavily indebted Chinese company that owns property. Rising bond yields due to high inflation has also impacted the global stock market. In the past month, more than 4 percent has been lost in the MSCI World Index.

One senior banker managing IPOs in Europe said, “We’ve experienced something of a buyer’s strike,” but he prefers to keep his identity private as he’s not authorized to talk about clients.

The market has changed quite badly and investors don’t want to spend money on IPOs unless it is a sure thing.

He indicated that except for the cancellations of deals, a variety of IPOs which were being worked on behind closed doors are being delayed.

A handful of high-profile IPOs still have yet to be completed, including Volvo Cars, Sweden. This company is looking to capitalize on the enormous demand for electric vehicles and offer the largest stock exchange listing in Europe by 2021.

According to bankers, the Nordic market is somewhat protected from other markets.

Truecaller, a Swedish spam-blocking app that was founded in Sweden, had an IPO valued at SEK 19.43 Billion ($2.21 Billion). It traded higher than its listing price Friday.

Norwegian robots manufacturer Autostore will be listing Oslo in this month. The Oslo listing could bring it up to NOK 103.4 Billion ($12.04 Billion).

Other companies that are navigating the market turmoil include OVHCloud (French cloud computing company), which is scheduled to price its IPO next Wednesday, and Softline (Russian software group), which plans a London IPO within the coming weeks.

($1 = 8.7945 Swedish crowns

($1 = 8.5884 Norwegian crowns)

Graphic: Sinking feeling