“The European market for IPOs has roared back this year after a very soft VirusCasedemic 2020“–Paul Ebeling
European companies raised $19.55-B through stock market listings in Q-1 of this yr, the highest since Q-4 of Y 2015, according to the data, and bankers say the pipeline on IPO candidates is crowded.
“There’s a particularly strong pipeline of European IPOs both in terms of volumes and quality of assets,” said the head of equity capital markets for the EMEA region at Deutsche Bank (NYSE:DB).
“Certainly our pipeline is the busiest we have seen in some time. Market dependent, we should have an even busier Q-2 than Q-1,” he said.
That is also true for SPACs (special purpose acquisition companies). SPACs have no operating business of their own and raise money with the purpose of merging with an operating company to take public.
“The merger with a SPAC offers companies an opportunity to go public faster than via the traditional route. A disadvantage is that such a deal is usually more expensive for the seller because the SPAC sponsor takes a share for himself,” said head of EMEA capital markets at Goldman Sachs.
That market segment has seen a surge in activity this yr in the United States and to a lesser extent in Europe, but lots of additional deals are in the pipeline in Amsterdam, Frankfurt and London.
So far, there have only been 10 SPAC listings in Europe in Ys 2020 and 2021, with a total value of about $1.3-B figures dwarfed by the United States where 522 such listings have brought in over $300-B.
Importantly 3 things are important for a successful SPAC: structure, sponsor, selection.
The SPAC must be structured in a way that gives investors a say on the target company and the ability to withdraw if necessary; the entrepreneur must be known and successful; and the target company should be active in an attractive industry like technology or healthcare.
Have a healthy, happy holiday weekend, Keep the Faith!