Euronext NV, Europe’s largest stock-exchange group, says the pipeline for initial public offerings remains strong even amid a current drought, but companies are having difficulty picking the right time to list because of market volatility.
(Bloomberg) — Euronext NV, Europe’s largest stock-exchange group, says the pipeline for initial public offerings remains strong even amid a current drought, but companies are having difficulty picking the right time to list because of market volatility.
There’s a vibrant set of businesses, particularly in the technology sector, that are ready to go public, Euronext Chief Executive Officer Stephane Boujnah said in a video interview from Paris Monday.
The IPO drought has been brought on by poor market conditions and a bleak economic outlook. New listings are being pushed back as investors are having to contend with hawkish central bank monetary policy and the risk of economies tipping over into recession.
“It’s more uncertainty of the volatility of the markets, rather than the depth of the universe of companies that are ready, or thickness of the pipe,” Boujnah said. “The pipe is large, the window is narrow at the moment.”
European equity capital markets have been missing out on the bullishness in stocks. In the slowest start to a year since 2019, proceeds from IPOs and share sales in listed companies fetched just $1.49 billion in January, data compiled by Bloomberg show. That was a 78% drop from a year earlier.
Boujnah sees risks concerning the stability of equity markets, asset rotation and the outlook for Europe, which could weigh on IPO activity restarting this year, yet he says prospects for companies are positive.
Recovery Sign
In a sign that activity may be picking up, Italian tech-media company TMP Group started trading in Milan this month, while Apollo Global Management-backed gaming firm Lottomatica SpA said on Monday it would begin the process to list on Euronext Milan.
Boujnah expects the wave of blank-check companies, or SPACs, that grew when there was abundant liquidity, to be over. “The reality is that most of those SPACs had two years to invest,” he said. “It turns out that some of them are starting to return money to shareholders.”
Euronext operates in the Netherlands, France, Italy, Belgium, Ireland, Norway and Portugal. Last week it said that it has made an indicative takeover offer to buy fund distribution platform Allfunds Group Plc for €5.5 billion ($5.8 billion) in cash and stock.
–With assistance from Julia Fioretti.
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