European companies halt IPO Plans on Market Conditions

Investors’ concerns over market conditions are preventing European companies from listing on local stock markets.

Planisware, a French software company, halted on Wednesday its plans to list in Paris. It would have been the biggest listing in Paris in two years. The chief executive blamed “extremely conservative” investors.

This is the latest European market debut to be canceled, following the withdrawal of plans by German military contractor Renk last week. According to a source familiar with the situation, another German company, DKV Mobility toll payments provider, has also decided to delay its planned listing until 2024.

These delays are a blow to Europe’s moribund new product market, which has plummeted to its lowest level ever since the 2008 Financial Crisis.

Many investors are worried about stagflation, a combination of high inflation and stagnant growth. The euro is down against the dollar, and Germany’s industrial production, Europe’s powerhouse, is also falling.

One European banker who is familiar with the market said, “We are done for the year.” He added that he expects further listings planned for this year will be delayed.

Planisware was selling just over 15mn shares at €16 to €18 each, ahead of an IPO in Paris. This deal would have valued Planisware between €1.1bn-€1.25bn.

But chief executive Pierre Demonsant stated that “the market environment has deteriorated in recent times, causing investors to be very cautious”.

The words of Demonsant echoed the words of German gearbox maker Renk who put their own Frankfurt stock market float on hold last week. The company stated that the market had become noticeably cloudy in the last few days.

DKV planned to ask for more than €4bn in valuation when it listed this month but also delayed its timing due to market conditions, a person familiar with the plans said. DKV didn’t immediately respond to an inquiry for comment.

Planisware Renk, and DKV, are all backed private equity groups – Ardian, Triton, and CVC, respectively. The last group is planning to list on the stock exchange later this year. These financial investors are under pressure to sell their investments and return the cash to their financiers.

Some people said that the failure of these transactions highlighted broader problems afflicting Europe’s IPO market despite the successful pricing Schott Pharma’s German medical vials company’s offering late September.

Craig Coben is a former global director of equity capital markets for Bank of America. He said that the “real issue” was the depth of the local markets.

Investors in European Initial Public Offerings do not want to be stuck in a stock in the event of a liquidity crisis. He said that there is not enough depth on the European equity market to support IPOs of companies worth between €1 and €2bn.

The tech IPO market across the Atlantic has done slightly better.

The German sandalmaker Birkenstock will list in the US in what is expected to be the third largest listing in this year. The shares of chip designer Arm, which chose New York instead of London for its first trading day in mid-September grew by about a quarter. However, they have fallen since then.