European IPO activity proved strong, led by e-commerce and tech listings | White & Case LLP

While IPO activity was robust throughout Europe, the Nordic region stood out

It was a blockbuster year for IPOs of European firms, following the global trend. In total, 476 European firms listed last year, excluding SPACs. Collectively, they raised US$90 billion. That represented increases of 156 percent and 253 percent, respectively, compared to 2020.

This was, by some margin, the busiest year for IPOs of European companies on record, even without counting SPACs, which likewise had a banner year—64 European SPACs listed in 2021, raising a total of US$13.8 billion. This represented an annual growth of 392 percent and 339 percent, respectively (see “A rollercoaster year for SPACs” on p. 6 for more on SPACs).


The year-on-year percentage increase in value of the European IPO market in 2021

The range of businesses coming to market last year was remarkably wide. Indeed, each of the five largest IPOs of the year featured a different sector. From transport to telecoms and from technology to machinery, businesses in every area of the market were able to raise money.

InPost leads the way

The largest 2021 deal involving a European company saw Polish logistics operator InPost list on the Euronext Amsterdam stock exchange in an IPO raising US$3.9 billion, underlining the huge demand for businesses offering exposure to the booming e-commerce market and the supply chains that support it.

The second-biggest IPO of a European company also played into an important structural shift. Volvo Cars raised US$2.7 billion in a listing on Nasdaq Stockholm that will support the Swedish auto manufacturer’s move into electric cars, as the industry transitions to cleaner technologies in the face of climate change.

Similarly, Vantage Towers benefited from another market development. The business, created by the telecoms giant Vodafone, builds and operates the infrastructure that enables mobile networks, which carry increasing data traffic, to operate across Europe. Its IPO, with a listing in Frankfurt, raised US$2.6 billion last year.

View full image ‘IPOs by offering and market size—Europe (incl. SPACs)’ (PDF)

Technology IPOs race ahead—followed by finance and life sciences

Overall, technology was the single busiest sector for IPO activity last year, with 162 new issues that raised US$27.5 billion. As in other markets, those figures include a number of businesses that are better described as technology-enabled, rather than pure technology plays. For example, the year’s biggest IPO in the sector was for Allfunds, which operates an online marketplace for the investment industry, connecting asset managers with customers such as retail banks and wealth managers. Allfunds, which is based in Spain, raised US$2.6 billion.

In second place, life sciences businesses were also market favorites; the sector completed 65 IPOs that raised US$8.9 billion. Deals such as the US$974 million listing of animal health group Vimian and the US$932 million IPO of Swiss drug maker PolyPeptide underscored investors’ demand for exposure to the life sciences sector.

Finance was the third-biggest sectoral contributor to last year’s IPO figures, with 33 new issues raising US$7.8 billion in the aggregate. The sector continues to see consolidation and innovation, particularly in the fintech arena, but there is also growing interest in IPOs from businesses that have previously preferred to stay private. In particular, last year’s US$1.2 billion IPO of UK private equity firm Bridgepoint turned heads. Following the strong stock market performance of Sweden’s EQT AB since its 2019 listing, the Bridgepoint deal was another success for the private equity sector.

Sweden was second only to the UK in IPO volumes last year, amid increasing demand for businesses across the Nordics.

Nordics flourish while the UK bucks Brexit

The Vimian deal was among Sweden’s largest IPOs of 2021 in a boom year for new issues in the country, which also included the listings of Volvo Cars and oat milk producer Oatly. Sweden was second only to the UK in IPO volumes last year, amid increasing demand for businesses across the Nordics.

That represented a continuation of the flourishing IPO market seen in the Nordic region for several years now, with a strong startup community, supportive regulation and a healthy domestic institutional investment industry all contributing to this performance. The very strong performance of Sweden’s stock market in particular last year—up 23.5 percent—also encouraged IPO activity, and issuers in the region won praise for their speedy adaptation to the pandemic; they were early adopters of tools such as virtual roadshows, for example.

In the UK, meanwhile, the uncertainties of Brexit do not appear to have dampened the IPO market. Last year saw 133 IPOs of UK companies—almost a quarter of Europe’s total volume—which raised US$25.3 billion. That was a 209 percent increase in volume on the previous year and a 204 percent increase by value.

Although a couple of IPOs performed poorly in the aftermarket—food delivery business Deliveroo, for example, saw its share price trade at approximately 33 percent below listing price one month after listing, and e-commerce group The Hut Group (THG) has similarly been trading below its IPO price since its January 2021 listing—the London Stock Exchange continued to attract a number of technology and high-growth issuers including Oxford Nanopore, Wise, Darktrace and Trustpilot.

In addition to tech IPOs, the LSE is still attracting listings from other sectors, plus listings from foreign issuers. Singaporean food firm Olam International, for instance, announced last year its intention to seek a dual listing in London and Singapore in the second half of 2022.

Events in Ukraine send markets into turmoil

Even under normal circumstances, European IPO activity would have struggled to match the same heights as the blockbuster 2021, but events in Ukraine only further depressed the potential for listing activity in the region. Equity markets in Europe will likely remain volatile as long as the situation lasts, especially given Europe’s dependence on Russia for energy. Soaring oil and gas prices and potential shortages could have knock-on effects on the rest of the economy, and further destabilize stock markets. As such, new listings activity is likely to be muted until later in the year.

In time, however, listings should come trickling back. Although central banks are poised to raise interest rates this year, any hike will be modest, and alternative options will be limited for investors. Broad secular trends such as digitalization and the energy transition will provide further impetus for new listings. As long as volatility eases, listings should return to European markets.

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