Quality and price will drive European IPO recovery

After years of stagnation, Europe’s battered IPO market is booming with the successful trading debuts of Athens International Airport and Lenk this week. For the IPO market to maintain its momentum, we need more affordable deals like this on high-quality assets.

As of Thursday, Lenk had soared more than 41% from its offering price in a €500m IPO, while Athens International Airport had soared by 14% following a €695m flotation, the largest in Greece in decades. recorded an increase in

These two big European IPOs provide important data points for a market that has struggled for both credibility and relevance following weak deal flow over the past two years due to inflation, rising interest rates and the Ukraine war. did.

But most damaging to the market last year was that many priced IPOs, such as payments processor CAB Payments, performed poorly in the aftermarket. In the case of CAB Payments, it missed numbers just a few months after its IPO and its stock price crashed.

While all IPOs are judged on their own merits, investors believe that IPOs can be a significant source of revenue and that prospective vendors need the confidence of a buyer base to support their portfolio companies. I needed to be reminded of that.

European equity capital markets needed positive information to boost confidence in the pipeline of even larger blockbusters later this year. There are two of them at Lenk and Athens airports.

To further the success of these transactions, issuers need to act quickly. With the US presidential election looming in November, creating significant political risk, selling shareholders will likely need to be more conservative with their pricing to return to some degree of normalcy. The IPO market has been unstable for more than two years.

As the saying goes, two swallows don’t make a summer. But there is finally some evidence that the IPO market is spreading its wings again.