(BFM Bourse) – After a boring 2022, the results of IPOs in 2023 are not flattering both in terms of the amounts raised and the number of operations. And for the companies that decided to launch this year, their audacity wasn’t really rewarded.
The IPO market was already losing momentum last year and will experience a major cold spell in 2023.
However, there were hopes for a resumption of operations in 2023. Unfortunately, this scenario did not materialize at all, according to the latest data from the company EY, which speaks of a “contrast year”. In 2023, the market situation again did not lead to a renewal of the rating, which was interrupted by investor concerns about interest rates and inflation.
These concerns have extended to the Paris market, which has seen only 7 IPOs this year. Six companies tried their luck in Euronext Growth, a section dedicated to small and medium-sized companies, while American cosmetics specialist Coty preferred Euronext’s professional section to offer a dual listing in Paris (in more than New York). . This specific section offers flexibility to foreign companies wishing to acclimatize to the Paris market by allowing issuers to admit their securities to the regulated market without issuing or selling to the public as of 2017.
On the other hand, it’s simply a blank year in the regulated section of Euronext Paris. Since Lhyfe’s IPO in May 2022, no public offering operation has been recorded. In October, software publisher Planisware was in the process of unblocking that desk, and the integration of Section A of Euronext Paris – reserved for capitalizations of more than €1 billion – previously changed its mind a day before the IPO, citing adverse market conditions.
So many disappointments, which explain the low number of transactions and also the collected amounts, which have not exceeded 300 million euros since the beginning of the year, are also reminded by EY.
Osmos Stock Market Chart 2023
In this context, how did the new companies that joined the Paris Stock Exchange perform this year? The results are not very flattering. The number of companies still trading above the IPO price can be counted on the fingers of one hand, including Osmosun, a water desalination specialist, which has clearly gained investor support in 2023, underpinned by the promising theme of blue gold management. . The stock has rallied 24% since its IPO, after doubling in price in mid-July amid a heat wave that highlighted tensions over water resources.
Apart from Osmosun, the exchange of other companies did not go smoothly. Online driving education specialist Lepermislibre was the first company to launch in 2023. And its stock market performance is more of a retreat than a quiet rise, with its shares down nearly 70% since its February IPO. Its introduction in April was followed by the Florentaise group, which has lost more than 75% of its value since its IPO.
Neither is the balance sheet favorable for this low-carbon soil company, which published very poor accounts for the financial year ending June 30 and whose financial situation is the subject of many concerns. Plus, cash-strapped and heavily in debt when it showed up at the doors of the Paris Stock Exchange, the group ended up raising painfully less than expected at its debut last April.
The third IPO of 2023, My Energy Broker is limiting the damage to date, down less than 20% since its first stock market moves in late May. For this Bordeaux company specializing in energy brokerage for professionals, it is not operational performance that is questioned by investors, it is simply a victim of investor aversion to small and medium-sized companies.
Vinpai has lost 16.7% since its IPO in July. The natural ingredients specialist for the food and cosmetics industry first attempted to list in June 2022 before backing out in the face of adverse market conditions.
As for Stif, we’ll take a little more time to come back to this operation in a future review, the company took its first steps in the stock market this week. However, the opening session was convincing, with the stock gaining nearly 9% in its first day of trading on Wednesday, December 20. To see if this trend will be confirmed as per the plan announced during the IPO or not.
To simplify the chart below, we have chosen to focus only on companies that have made a public offering and exclude private placements and direct offers.
Variations stopped at the end of 12/21/2023
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In view of this more than contrasting year 2023 for newbies in the stock market, the question arises: how to succeed in your introduction and then have a good performance in the stock market? Simple answer: keep your (beautiful) promises.
At the time of the IPO, the company actually needs to offer investors a clear vision for 3 to 5 years, reminds Nisa Benaddi, partner at EuroLand Corporate. To maximize the chances of a stock market success story, he recalls that companies must ensure that they announce a clear development project in a promising market segment that is supported by engaged management, including capital. And the more the promises given at the time of the IPO are kept, “the more investors will maintain their trust in the company, or even strengthen it, and new (investors, editor’s note) will come to the capital”, reminds the specialist.
If we now extend the lens not only to 2023, but to all small and mid-cap IPOs from 2021 onwards, only a handful of companies have managed to post a positive performance since then.
To simplify the following chart, we have also decided to focus only on companies that have made a public offering and exclude private placements and direct listings.
Variations stopped at the end of 12/21/2023
“If we look at the IPOs that have taken place in recent years, 5/6 of the companies are trading below their IPO prices, which tends to prove that they were listed at too high a price. And the more you little beings, the more likely you are to crash after introduction ,” specified Pascal Quiry in a previous article dedicated to the underperformance of small and medium-sized companies in the Paris market.
“Any disappointment can cause distrust among investors and create conditions for a gradual decline in the share price. In such a scenario, it will be more difficult for the company to attract investors or even raise funds on good terms,” adds Nisa Benaddi.
Despite everything, the stock market remains a fantastic way for businesses to finance themselves. However, “market conditions”—systematically challenged when an operation is not successful—do not in themselves express the failure or success of an operation. It is really the conditions offered to investors (required valuation multiples) that ultimately guarantee or not the success of the project.
Sabrina Sadgui – ©2023 BFM Bourse