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Written by Pablo Mayo Cerqueiro and Emma Victoria Farr
LONDON/FRANKFURT (Reuters) – A strong debut for Swiss skin care company Galderma on Friday eased tensions in Europe’s IPO market, bankers said, a day after a poorly received listing for German retail giant Douglas. .
Galderma’s listing on the Zurich stock exchange is Europe’s largest IPO since Porsche in September 2022.
The long-awaited listing comes as European companies worth billions of dollars line up to go public.
Those hopes risked being dashed when CVC-owned Douglas shares fell more than 12%.
Still, Galderma shares soared above their issue price in the first few hours of trading, and the New York social media company Reddit saw the company’s shares rise more than 48% overnight.
Antoine de Gyllenschmidt, Co-Head of European Equity Capital Markets at Goldman Sachs, said: “IPO sentiment remains positive globally and in Europe, with deals in the pipeline for the second quarter and second half of the year. It is expected that the event will proceed as planned.” Middle East and Africa, where he worked on the IPOs of Galderma and Douglas;
The deals between these two private equity-owned companies were closely watched by bankers and investors after 2023 saw a second consecutive year of declines in global IPO stocks.
With the number of mergers and acquisitions reaching the lowest level in a decade, there is increasing pressure on buyout funds to sell companies, return capital to investors and leverage new capital.
unsold assets
Private equity firms have a staggering $3.2 trillion in unsold assets, limiting the return of capital to investors and having a chilling effect on fundraising, according to analysts at Bain & Company. It is said that there is
But with central banks signaling a halt to rate hikes, stock markets are becoming a likely exit route.
“The large private equity deal shows that the IPO market is receptive,” said Markus Mayer, head of German ECM at Bank of America.
We are already seeing some success stories in Europe this year.
Tank gear maker Lenk, which first entered the Frankfurt stock exchange this year, has nearly doubled its issue price of 15 euros since listing in February. The company’s IPO was one of several postponed last fall amid uncertainty over interest rates and geopolitical tensions.
After Lenk’s debut, both Douglas and Galderma used the positive mood to accelerate their IPOs.
CVC-owned Douglas has raised 850 million euros ($920 million) to pay down debt. The stock traded at the bottom of its indicated price range of 26 euros, with a floor price of 22.7 euros.
EQT-backed Galderma raised around CHF2 billion ($2.23 billion) and opened at CHF61 on the Swiss SIX exchange, up 15% from the final IPO price of CHF53 per share. . Displayed price range.
be careful ahead
To be sure, Mr. Douglas will leave a bad taste in the mouth for investors who have suffered losses and could be a drag on some IPO candidates.
“We’re still in the recovery phase, so it’s not an all-opportunity environment, it’s a selective environment,” said Martin Thorneycroft, Morgan Stanley’s head of EMEA cash ECM, who co-led Galderma’s IPO. .
Julian Schulze Delacruz, a capital markets lawyer at Noah, said caution remains, but more new issues are expected.
Private equity firm Permira is preparing an IPO for Golden Goose, the Italian luxury brand known for its well-worn sneakers, as early as the second quarter. Apollo-backed financial firm OLB Bank also said it was preparing for an initial public offering.
Fuel card provider DKV Mobility, another company in the CVC portfolio after Douglas, is also waiting to return after postponing its IPO plans last year.
CVC itself plans to enter the market as early as after Easter with an IPO worth more than 1 billion euros, according to people familiar with the plans.
(1 dollar = 0.8987 Swiss Franc)
(1 dollar = 0.9241 euro)
(Reporting by Pablo Mayo Cerqueiro in London and Emma-Victoria Farr in Frankfurt; Writing by Anousha Sakoui; Editing by Jason Neely)
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