A cura di Gabriele Malloggi
European companies are postponing their plans to go public on local stock exchanges due to investor apprehensions about market conditions, jeopardizing the resurgence of new listings.
Planisware, a French software group, recently halted its intentions to have the largest listing in Paris in two years. The company’s CEO attributed this decision to the caution exhibited by investors. This decision comes after the cancellation of listing plans by German military contractor Renk last week. Additionally, DKV Mobility, a German toll payments provider, is delaying its planned listing until 2024, as per people familiar with the matter. Private equity giants Ardian, Triton, and CVC have also delayed their IPO plans, with the latter having already postponed its IPO last year due to the Russian conflict.
These delays further undermine the already stagnant European IPO market, which is currently at its lowest point since the 2008 financial crisis. Weak European macroeconomic data has raised concerns among investors about the possibility of stagflation in the continent, a troubling combination of stagnant growth and high inflation.
According to Craig Coben, a former Global Head of Equity Capital Markets at Bank of America, “There’s insufficient depth in European equity markets to support IPOs of companies valued between €1 to €2 billion,” referring to the market’s ability to absorb substantial market orders without significantly affecting security prices (the more buy and sell orders, the greater the depth of the market).
On the other hand, the American IPO market appears to be thriving, with fundraising volumes on the rise after a prolonged downturn – September and October saw a flurry of deals that have rekindled hopes of a return to normalcy.
UL Solutions, a Chicago-based safety testing and certification group, is pushing ahead with plans for one of the largest initial public offerings of the year, aiming to value the company at over $5 billion. The company aims to raise up to $1 billion for its non-profit owner through a listing on the New York Stock Exchange, as reported by the Financial Times.
While the deal could potentially happen in November, its timing and valuation remain subject to change. If it proceeds as planned, it could become one of the top listings in 2023 by capitals raised. So far, only seven companies have raised over $500 million in an IPO this year, with three of them – namely Arm, Kenvue, and Birkenstock – raising over $750 million.
UL Solutions recently revealed that it had submitted a confidential preliminary prospectus with regulators earlier this month, with JPMorgan Chase and Goldman Sachs being the lead underwriters for the deal.
According to sources familiar with the IPO, the company had initially discussed a valuation of up to $10 billion, although a third source stated that the current target is in the range of $5 billion to $7 billion. This valuation range would place it in a similar bracket as its largest competitors in Europe, such as SGS, Bureau Veritas, and Intertek, which have market capitalizations approximately twice the annual revenue or 10 times the EBITDA.
Despite concerns stemming from weak post-IPO trading in recent deals, UL Solutions is perceived as relatively less risky compared to many traditional IPO candidates due to its long history of profitability and investment-grade credit rating
