European companies halt IPO plans on concerns over market conditions

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European companies are delaying plans to float on local stock exchanges, as investors’ concerns about market conditions threaten to kill off a revival of new listings.

French software group Planisware halted its plans on Wednesday to float in what would have been the largest listing in Paris for two years, with its chief executive blaming “extremely cautious” investors.

That marks the latest market debut in Europe to be pulled, after German military contractor Renk dropped plans for listing last week. Another German company, toll payments provider DKV Mobility, is also putting off a planned listing to 2024, according to a person familiar with the matter.

The delays mark a further blow to Europe’s moribund market for new offerings, which has slumped to its lowest level since the 2008 financial crisis.

We’re done for the year

A rush of weak European macroeconomic data has left many investors worried that the continent is destined for a period of stagflation — a toxic combination of stagnant growth and high inflation. The euro has plunged against the dollar and industrial production in Germany, Europe’s powerhouse, has declined sharply.

“We’re done for the year,” said one European banker familiar with the market, adding that they anticipated further listings intended for this year to be delayed.

Planisware had been marketing just over 15mn ordinary shares between €16 and €18 apiece ahead of a listing in Paris, in a deal that would have valued the company between €1.1bn and €1.25bn.

However chief executive Pierre Demonsant said the “market environment had deteriorated recently, prompting investors to be extremely cautious”.

Demonsant’s words echoed those of German gearbox manufacturer Renk, which put its own float on the Frankfurt stock exchange on ice last week. “In the past days, the market environment has clouded noticeably,” the company said at the time. 

DKV had been planning to seek a more than €4bn valuation for a listing this month, but also pushed off its timing because of market conditions, the person familiar with its plans said. DKV did not immediately respond to a request for comment.

Planisware, Renk and DKV are all backed by private equity groups — respectively Ardian, Triton and CVC, the last of which has been planning its own stock market listing for later this year. Such financial investors face pressure to exit their investments to return cash to their backers.

However, some said the failure of these deals highlighted broader issues afflicting Europe’s IPO market, despite the successful pricing of German medical vials group Schott Pharma’s offering in late September.

Craig Coben, a former global head of equity capital markets at Bank of America, said the “real problem” concerns the depth of local markets.

“Investors in European IPOs don’t want to be trapped in a stock if liquidity dries up. There’s not enough depth in European equity markets to sustain IPOs in companies valued between €1 to €2bn,” he said.

The market for tech IPOs across the Atlantic is faring slightly better.

German sandalmaker Birkenstock is set to float in the US on Wednesday in what will be the third-largest US listing this year. Shares in chip designer Arm — which opted for New York over London — jumped by a quarter on their first day of trading in mid-September, though they have since fallen roughly 8 per cent.