Anyone expecting a dramatic restoration of Europe’s IPO market might have to wait.
That’s according to bankers at Bank of America (BofA), who told Bloomberg News in an interview Thursday (July 20) that it could take some time before there is a flurry of new initial public offerings (IPOs) in Europe.
“It’s a gradual reopening rather than a flood of deals,” said James Palmer, BofA’s head of equity capital markets in Europe, the Middle East and Africa.
“Indices have performed well, but a lot of the individual moves below the surface are more mixed. History will tell you that a lull in IPO markets can last for a two-year period before a recovery emerges; it looks like history is repeating itself again.”
Bloomberg says its data shows that nearly 40% of the roughly $9.5 billion in IPO proceeds that European exchanges have logged so far this year was raised just in the last month.
Last week Romanian utility Hidroelectrica SA took in $1.8 billion in Europe’s largest IPO of the year, coming soon after the listing of Thyssenkrupp AG’s Nucera hydrogen operation. Both stocks climbed during the first day, leading to a brief spurt of optimism. Transaction processor CAB Payments was less successful, falling on its debut.
The news follows reports from last week that China’s IPO market was also struggling, with applications for new listings falling by a third during the first half of 2023. Exchange data shows that Chinese exchanges accepted 330 new applications during that period, down from more than 500 in the same time frame in 2022.
As a result, the amount of proceeds raised from China’s IPO market has decreased from last year, although it was still the largest globally in the first half.
As PYMNTS has reported, the IPO market has been somewhat uncertain worldwide, thanks to rising interest rates and inflation dampening demand for new listings.
A recent Wall Street Journal (WSJ) report showed that traditional IPOs raised around $9 billion in the first half of 2023, a figure higher than last year’s but still below what companies had generated at the midway points of 2021 and 2020.
“We’re in an IPO market that’s not fully open yet. We’re in rebuilding mode,” Douglas Adams, Citigroup’s global co-head of equity capital markets, told the WSJ. “Rebuilding modes generally aren’t a straight line.”
