European Capital Raising in 2020
posté le 29 janvier 2021
Throughout the year, the impact of the global Covid-19 pandemic has been felt worldwide. Across Europe, businesses, particularly smaller ones, suffered from the crisis. In July, the European Union agreed to a long-term budget of €1.8 trillion to secure citizens’ livelihoods and protect the economy in a post-Covid-19 era.
The financial sector was shaken, from extreme volatility (the VSTOXX volatility index reached a high of 85.62 points on 16 March 2020) and turbulent index performances; and initially, uncertainty overshadowed the potential stabilisation of the situation.
However, Euronext markets remained resilient. Stock market volatility was reflected in the shape of the IPO year. Stock exchanges saw a spring lull in IPOs – but as stock market sentiment recovered, IPO activity quickly returned in May. A small but steady stream of flotations then came in, before a sudden flourish at the end of the year, as good news for coronavirus vaccines boosted stock valuations.
Euronext listing activity remained strong with 90 new listings compared to 45 in 2019. €49.7 billion was raised through follow-on offerings (+48% vs 2019) and €6.67 billion through new listings (+42% vs 2019). Among notable IPOs that managed to list pre-crisis, the French Gaming company Nacon successfully raised €117m in Paris. Europe’s first fully digital IPO hit in May-20 with Pexip, which showcased its virtual meeting technology throughout the IPO process, and raised €273m. This was shortly followed by Europe’s largest IPO this year, when coffee giant JDE PEET’s which raised €2.6bn in Amsterdam for a €15.6bn market cap.
Several trends emerged in this context on Euronext Markets:
- Financial markets have put Environmental, Social and Governance (ESG) issues at the top of the agenda, due to an increased demand for ESG assets and products. This year saw the harmonisation of the FESE reporting guidelines across the European marketplaces. A significant number of Green convertible bonds and Cleantech operations has been recorded on Euronext markets (17 new listings of cleantech companies), further emphasizing the need to increase the focus on sustainable finance activities.
- An overall positive post-IPO performances for newly-listed companies: share prices increased by +30% on average since IPO for domestic companies that listed in 2020, including +43% for Nacon, +5% for Paulic Meunerie and +14% for Ecomiam.
- A sharper tech focus with 24 new tech IPOs including large caps like Link Mobility (€1.15bn) and Meltwater (€1.13bn), and 6 new listings of life Science companies joining an existing franchise of 116 companies for a market cap of €41bn in this sector.
- The listing of SPACs (Special Purpose Acquisition Companies) that, until recently, had mostly prospered in the US, with the IPO of Dutch Star Companies TWO (€110 million) in Amsterdam, and the listing of 2MX Organic (€300 million) in Paris. This SPAC created by Xavier Niel, Matthieu Pigasse and Moez-Alexandre Zouari, aims at completing one or several acquisitions in the consumer goods industry in Europe with a dedicated focus on sustainability.
- A surge in retail investors interest: purchases of French shares by private individuals were multiplied by 4 in March 2020, in an overall volume multiplied by 3. Almost 1.4 million retail investors have bought or sold stocks in 2020. Amongst them, more than 410,000 had never passed an order at the stock exchange before or had been inactive since January 2018.
- This pandemic has led the industry to adapt communication methods, with the majority of interactions moving online, impacting interactions of listed companies with their shareholders, moving to online AGM in particular.
Despite the likelihood that the aftermath of this global crisis will be felt throughout the coming year, the number of listing operations planned for coming months is steadily growing.