A flurry of IPO activity in September has raised hopes of an improved listing environment for private equity and venture capital backed businesses and set the stage for an increase in exit activity in the final quarter and into 2024
While listings are focused on the U.S.
, there are indications that some European IPOs could be around the corner.
U.S. private equity exit value jumped by 67% on the prior quarter to $87.3bn in the three months to the end of June, the first increase after four consecutive quarters of decline,
European exits rose more modestly by 29% to €68bn,
EMEA listings raised just $9.6bn in the second quarter, dominated by the listings of the UAE’s ADNOC gas and separate logistics businesses on the Abu Dhabi Securities Exchange
K-based chip designer Arm Holdings listed on New York’s Nasdaq at the top end of its price range, giving the company a valuation of over $52bn and raising about $4.9bn for owner SoftBank
However, Arm’s shares jumped by as much as 25% on their debut, raising confidence that high-quality companies could get a positive reception – and that public investors could also enjoy some valuation uplift from new listings. The company’s shares have since fallen though, providing a reminder that there are still headwinds.
the Nasdaq exchange remains the preferred listing venue due to the concentration of company peers and tech-focused investors. However, there are signs that companies in sectors that command less lofty multiples are also drawn to the U.S. rather than European markets.
German sandal maker Birkenstock filed to float on the New York Stock Exchange at a valuation in excess of $8bn, almost double the level at which L Catterton acquired the business in 20215. With the S&P 500 up more than 17% year-to-date compared to 7% for Europe’s Stoxx 600 and just over 1% for the FTSE 100, sponsors are clearly seeking to tap the potential for higher valuations and stronger share price performance in the U.S., driven by more liquid markets and higher trading volumes.
European exchanges are also opening up for new listings. German industrials group Renk, which makes gearboxes for Leopard tanks and is owned by Triton, is said to be preparing its IPO price range for early October
privately-owned German glassmaker Schott AG is reported to be planning the float of its medical glassware division Schott Pharma at an expected valuation of about €4bn
Cinven, EQT and Canadian pension fund CPPIB are said to have hired banks for a potential listing of Spanish leisure group Hotelbeds8, while Apax, EQT and Oakley Capital are reported to be exploring the IPO of Idealista, the leading real estate portal in Spain and Southern Europe
Faced with the loss of major companies – such as Arm – to the U.S., the London Stock Exchange is investigating innovations to attract more young companies. Among those is an “intermittent trading venue” to allow shareholders to sell holdings in private start-ups and scale-ups, with plans allowing for 12 such auctions a year
ensuring enough liquidity to enable shareholders to achieve exits – or partial exits – at fair value for their stakes.
Other options, such as minority stake sales, are becoming increasingly common as some sponsors look to generate liquidity without losing control of their businesses.
We have seen an increase in refinancings as private equity firms reset and renegotiate debt packages to extend maturities.
Those new financings are typically attached to higher coupons.
However, where companies have used cash flows to pay down a portion of borrowings, and company performance has improved, there can be headroom for sponsors to increase debt levels and take money off the table in the form of dividends.
we expect to see more companies becoming “exit-ready
Glasp is a social web highlighter that people can highlight and organize quotes and thoughts from the web, and access other like-minded people’s learning.