ANALYSIS-Europe’s record IPO year has a sting in its tail

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LONDON, Oct 8 (Businesshala) – Europe’s record year for an initial public offering (IPO) is threatening a turning point as inflation fears and concerns over the asset crisis in China stoked investor appetite for new stock listings. is extended.

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Deal cancellations and postponements have started hitting the screens over the past week with France’s Icade Sante and Switzerland’s Cronext.

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Czech company Eurovag pushed through a downsized London IPO on Friday, but stock of the trucking services group fell 10% from its 150 pence offer price.

Several companies listed earlier this year are trading below their IPO price, with the FTSE Renaissance IPO Index for Europe, Middle East and Africa region down 9.19% so far this year.

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“Inflation fears and rising interest rates, as well as uncertainty around China, have made many investors more cautious,” J. said Christoph Lang, Head of Core Equity in Europe for Safra Sarasin. “The Goldilocks atmosphere we’ve had for the last twelve months is over.”

The United States has also been hit by a change in investor mood, with Peleton rival IFIT abandoning its IPO plans, while shares of fitness center operator Life Time opened at 8% below its offer price at the start. handjob

This is in contrast to the first nine months of 2021, when listings based on Refinitiv data reached their highest level since the dotcom bubble of 2000, even though the pace slowed in the third quarter.

The IPO market closely reflects investors’ appetite for risk and if the macroeconomic environment is showing signs of stress, they become reluctant to lend large amounts of cash to a single company.

Uncertainty over the fate of heavily indebted Chinese property firm Evergrande and rising bond yields on strong inflation numbers have weighed on stock markets globally. MSCI’s World Index is down more than 4% in the past month.

“We have a buyer’s strike, which isn’t a phrase I’ve used for a while,” said a senior banker who manages IPOs in Europe. his customers.

“The market has changed quite viciously and investors are reluctant to put money to work in IPOs unless they are a complete slam dunk.”

He said that apart from canceling the deal, several IPOs being prepared behind the scenes are being postponed.

Some high-profile IPOs are still headed to the market in Sweden led by Volvo Cars, a company that is hoping to tap into the huge appetite for electric vehicle makers and will have the biggest stock market listing in Europe in 2021 .

Bankers also said that the Nordic market feels a bit untouched by the crisis elsewhere.

Swedish spam blocking app Truecaller completed an IPO that was valued at SEK 19.43 billion ($2.21 billion) and traded above its list price on Friday.

Norwegian robotics company Autostore is planning an Oslo listing this month that could be valued at up to NOK 103.4 billion ($12.04 billion).

Others facing market turmoil include French cloud computing company OVHCloud, which is due to price its IPO next week, and Russian software conglomerate Softline, which is planning a London IPO in the coming weeks. ($1 = 8.7945 Swedish Crown) ($1 = 8.5884 Norwegian Crown)

Reporting by Abhinav Ramnarayan and Oliver Hurt. Editing by Jane Merriman

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