17 Jul, 2024
Large listings fuel European IPO market recovery in Q2, boost full-year outlook
By Vanya Damyanova and Umer Khan
Large-ticket offerings drove European IPO proceeds to a new high in the second quarter of 2024, raising expectations for a continued market recovery later this year.
At $8.53 billion, aggregate proceeds from European stock market listings completed between April 1 and June 30 increased almost five times year over year, marking the strongest second-quarter result since the record-breaking 2021, S&P Global Market Intelligence data shows. This follows a similar increase in proceeds in the first quarter, which was the strongest opening three-month period for IPOs in Europe since 2021.
Activity reached unprecedented highs in 2021 on the back of a post-pandemic boom in business before issuance dried up in the subsequent two years as rising interest rates and geopolitical tensions soured sentiment. The return of large listings has fueled hopes that the market will stage a comeback this year.
"Large IPOs often act as icebreakers that reopen the market and this can be seen in the numbers for the first half of 2024," Martin Steinbach, EY IPO Leader of Europe, Middle East, India and Africa (EMEIA) said in an interview. Led by large listings in Europe, the EMEIA region has achieved its highest share of global IPO activity since 2008, accounting for 46% of total IPO proceeds in the first half, he said.
Europe's share in global IPO proceeds reached roughly 29% in the second quarter of 2024, after hitting a four-year high of nearly 35% in the previous three months, Market Intelligence data shows.
The IPOs of Spanish beauty and fashion group Puig Brands SA, which raised $2.93 billion, and of UK-based investment group CVC Capital Partners PLC, which raised $2.44 billion, in April were the two largest European listings in the second quarter, the data shows.
The two listings were also the largest IPOs globally in the second quarter, according to London Stock Exchange Group (LSEG) data. In the first half of 2024, Europe accounted for five of the 10 largest IPOs globally and the three largest global listings overall, including Puig, CVC and Swiss skincare manufacturer Galderma Group AG, which raised $2.54 billion in March, the LSEG data shows.
The increase in high-value IPOs is a clear signal that large companies see current market conditions as a good window of opportunity to go public, EY's Steinbach said. Interest from private equity investors in IPOs as an exit route has also increased over the first half of the year, which bodes well for activity in the second half of 2024, he said.
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Elections in Europe and the US could affect the economic outlook, business and investor sentiment in the regions, which may impact IPO activity in the coming quarters, yet the outlook for Europe remains positive for now, Steinbach said. Market conditions are conducive for further growth as rising benchmark equity indexes have supported valuations and volatility index levels remain benign despite geopolitical tensions, he said. Major central banks are also set to cut rates, which would further support valuations, Steinbach said.
The largely positive aftermarket performance of the European IPOs is seen as another driver of further momentum for deal flow in the second half of this year and beyond, Kat Kravtsov, capital markets director at PwC UK said in the accounting firm's latest IPO report.
"The IPO pipeline appears healthy well into 2025, indicating sustained recovery is underway. Companies are preparing early so they are 'IPO ready' and able to take advantage of favorable listing conditions once the uncertainties presented by the elections taking place across the globe this year are settled," Vhernie Manickavasagar, capital markets partner at PwC UK, said in the report.