Euronext: Big winter in the Paris IPO market in 2022

(BFM Bourse) – 2022 will be a particularly bad year for the Paris IPO market. Between 2021 and 2022, their number fell by 37%, according to the IPO Observatory on Euronext Paris by Allegra Finance.

2022 is to be forgotten on the IPO front. After a record year in 2021, the IPO market collapsed in 2022 due to an unfavorable stock market environment and adverse geopolitical context.

Between the war in Ukraine, the return of inflation and the uncertainty of the presidential election, these are all factors that have caused volatility in financial markets. Therefore, it is difficult for managers to jump into the stock market. So, while waiting for the storm to pass, they preferred to postpone their IPO project.

“The overall slowdown in IPO activity shows a very strong impact of the macroeconomic environment on manager and investor confidence,” Allegra Finance said in its latest annual IPO report.

The brokerage company is thus announcing 36 IPOs in 2022. This is 37% less than in 2021, a record year with 57 operations during that period. Last year, 487 million euros were raised, which is far less than the 4 billion collected in 2021.

However, the results are not as dramatic as they seem. However, the number of IPOs remains 22% higher than the average of the last seven years on the Paris market, Allegra Finance points out.

5 IPOs on Euronext Paris

In detail, IPOs, which measure the activity of the primary market – that is, without direct listing and transfers to another compartment – represented only 12 operations in 2022 compared to 33 in 2021. Over the past 7 years, the average was around 15, Allegra Fiance specifies .

The regulated market Euronext Paris, generally accustomed to large-scale fundraising, has not been spared the prevailing gloom in the IPO market. Only 5 IPOs were made in 2022, half as many as in 2021. Nevertheless, it remains the preferred market for capitalizations above 150 million euros and raises above 110 million euros. Green hydrogen specialist Lhyfe raised 118 million euros in May 2022, while “SPAC” (investment vehicle specially created for the purpose of acquisition) Eureking, specializing in the production of biopharmaceutical products, was also entrusted with 150 million euros by qualified investors. in May 2022.

Two other “blank check” companies already listed on Euronext have carried out their operations: I2PO SA merged with Deezer in July 2022, while Teract, the company created by the merger of the SPAC 2MX Organic and the distribution branch of the agricultural cooperative InVivo, the owner of the companies Gamm Vert and Jardiland did its IPO last August.

The success of Euronext Growth

Amid this sensitive environment, Allgera Finance praises the attractiveness of the Euronext Growth market. This SME-friendly department has benefited from new blood. The brokerage company recalls that in 2022 there were 10 public offering operations with 193 million euros. In its annual report, Allegra Finance highlights the dynamics of transfers “between the regulated market and Euronext Growth, which “reflects the success of this section with MSP-ETI”.

In 2022, fourteen companies decided to leave the regulated market of Euronext Paris for Euronext Growth and its less restrictive rules. Atari, Catering International Services, Hopscotch Group, Micropole or more recently 2CRSI have supported the process of exits from the regulated market of Euronext Paris towards a less restrictive sky.

Three companies (Metavisio, Hopium and Immo Blockchain) moved to a higher division with a transfer from Euronext Access to Euronext Growth, which “more suits their current size”. And 4 companies were subject to direct listing (Lervolino & Lady Bacardi Entertainment, Eniblock, Racing Force and TaTaTu) still on Euronext Growth.

“Finally, it should also be noted that this section (Euronext Growth) welcomes more and more companies with a capitalization of more than 100 million euros. Thus, of the 31 operations recorded in 2022, 8 had a capitalization on the date of “introduction greater than or equal to 150 million euros,” specifies Yannick Petit, CEO of Allegra Finance.

In 2022, two sectors in particular stood out, namely non-core goods and services (25%) and technology-intensive stocks (22%), followed by healthcare stocks (14%) and industrial stocks (11%).

A rather disappointing performance from the rookies

2022 was not a great year, both in terms of activity and the performance of the companies that dared to go for it. Allegra Finance describes them as “quite disappointing”. Only 2 companies achieved trading performance above the IPO price. The hit of the year was TaTaTu, a young Italian company specializing in social networks, which panicked the shelves with a gain of 283% since its IPO in October 2022.

The second place in this ranking was occupied by solar tracker specialist OKwind, whose share price has appreciated by 25% since its first stock market debut last July. On the other side of the spectrum is Haffner energy. The first company to list on Euronext Paris in 2022, the green hydrogen specialist, saw its shares fall 77% during the financial year.

In their latest contribution from 2022, the authors of the Vernimmen letter recalled that over the past nine years, a company with a capitalization of less than 500 million euros had “an 83% chance of experiencing a price decline compared to that of the introduction”.

Still, Allegra Finance wishes to put into perspective the poor stock market performance of companies that are new to the financial markets, “with respect to the CAC40 and CAC Mid & Small indices, which have recorded losses of -10.3% and -14, respectively, over the same period. 7%.

What about 2023?

2023 promises to be IPO-rich for EY, although activity is likely to remain sluggish until at least the first quarter. “Conditions appear favorable for global IPO activity to pick up again in the second half of the year,” explains EY in its latest study on the IPO market.

“For the IPO market to become more active again, there are a number of prerequisites: positive sentiment and rising stock market performance, falling inflation and the end of interest rate hikes, easing of geopolitical tensions and easing of the effects of the Covid-19 Pandemic in the economy,” recalled Franck Sebag, associate at EY.

Some companies have already announced their intention to go public in 2023. Renault, for example, announced last November that it wanted to list Ampere, its entity dedicated to the production and marketing of electric vehicles, on Euronext Paris. Renault’s press release thus states the IPO date “at the earliest” in the second half of 2023. Thierry Piéton, for his part, even mentioned “the end of the year” in 2023, depending on market conditions.

The next spin-off operation should be on the agenda for this year 2023. In accordance with its strategic plan presented in June 2022, Atos plans to split into two separate companies. The first company would retain the Atos name and combine the historical activities of data center infrastructure management in significant structural decline.

The second would therefore be called Evidian and would combine activities related to digital transformation as well as big data and security (BDS). This spin-off project could be completed in the second half of 2023, with Evidian listed before the end of the year, via a distribution of shares to Atos holders. According to Les Echos, Airbus would also be following part of this sector. But Airbus’ bid for future Atos subsidiary Evidian is being met with little enthusiasm in government, BFM Business reported on Friday. To be continued…

Sabrina Sadgui – ©2023 BFM Bourse

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