Big brake on IPOs in 2022
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(News Bulletin 247) – The year 2022 will have been particularly bad on the Paris IPO market. Between 2021 and 2022, their number fell by 37%, according to Allegra Finance’s IPO Observatory on Euronext Paris.

The year 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 an adverse geopolitical context.

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Between the war in Ukraine, the return of inflation and the uncertainty of the presidential election, these are all factors that generated volatility on the financial markets. Difficult then for the leaders to embark on the deep stock market bath. So, while waiting for the storm to pass, they preferred to put their IPO project on hold.

“The global slowdown in IPO activity demonstrates the very strong impact of the macroeconomic environment on the confidence of managers and investors,” said Allegra Finance in its latest annual report on IPOs.

The stockbroking company thus lists 36 IPOs in 2022. This is 37% less than in 2021, a record year with 57 transactions carried out over the period. In volume, 487 million euros were raised last year, much less than the 4 billion accumulated in 2021.

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

5 IPOs on Euronext Paris

In detail, initial public offerings which measure the activity of the primary market – i.e. excluding direct listing and transfers to another compartment – represented only 12 transactions in 2022 against 33 in 2021. Over the past 7 years, the average has been around 15, says Allegra Fiance.

The regulated market of Euronext Paris, generally accustomed to large-scale fundraising, was not spared by the ambient gloom on the IPO market. Only 5 IPOs were carried out in 2022, i.e. half as many as in 2021. It nevertheless remains the preferred market for capitalizations greater than 150 million euros and raisings greater than 110 million euros. The green hydrogen specialist Lhyfe raised 118 million euros in May 2022 while the “SPAC” (an investment vehicle specially created for an acquisition) Eureking, specialized in the manufacture of biopharmaceutical products is entrusted with 150 million euros by qualified investors also in May 2022.

Two other “blank check” companies already listed on Euronext proceeded with their operations: I2PO SA merged with Deezer in July 2022 while Teract, a company resulting from the merger between SPAC 2MX Organic and the distribution branch of the agricultural cooperative InVivo , owner of Gamm Vert and Jardiland, went public last August.

The success of Euronext Growth

Amid this sensitive environment, Allgera Finance praises the attractiveness of the Euronext Growth market. This compartment adapted to small and medium-sized businesses has benefited from new blood. The brokerage firm recalls that 10 operations with a public offering were carried out in 2022 with 193 million euros raised. In its annual report, Allegra Finance insists on the dynamism of transfers “between the regulated market and Euronext Growth, “reflecting the success of this compartment with SMEs and ETIs”.

In 2022, fourteen companies have chosen 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 fueled the procession of departures from the regulated market of Euronext Paris to less restrictive skies.

Three companies (Metavisio, Hopium and Immo Blockchain) moved up to the top division with a transfer from Euronext Access to Euronext Growth which is “more suited to their current size”. And 4 companies were listed directly (Lervolino & Lady Bacardi Entertainment, Eniblock, Racing Force and TaTaTu) still on Euronext Growth.

“Finally, it should also be noted that this compartment [Euronext Growth] welcomes more and more companies with capitalizations above 100 million euros. Thus, of the 31 transactions recorded in 2022, 8 had a capitalization on the day of introduction greater than or equal to 150 million euros” specifies Yannick Petit, CEO of Allegra Finance.

In 2022, two sectors stood out in particular, that of non-essential goods and services (25%) and stocks with a high technological content (22%) followed by healthcare stocks (14%) and industrial stocks (11%).

A rather disappointing performance by newcomers

The year 2022 was not a great vintage, both in terms of activity and the performance of companies that dared to take the plunge. They are described as “fairly disappointing” by Allegra Finance. Only 2 companies have managed the feat of evolving above their initial public offering price. The box of the year goes to TaTaTu, a young Italian company specializing in social networks which has panicked the counters with a gain of 283% since its IPO in October 2022.

Second place in this ranking goes to 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, we find Haffner Energy. The first company listed on Euronext Paris in 2022, the green hydrogen specialist saw its share price plunge by 77% over the financial year.

In their last post for 2022, the authors of the Vernimmen letter recalled that over the past nine years, a company capitalizing less than 500 million euros “had an 83% chance of experiencing a fall in its price compared to to that of the introduction”.

Allegra Finance nevertheless wishes to put into perspective the poor stock market performance of companies that have recently arrived on the financial markets “compared to the CAC40 and CAC Mid & Small indices which respectively recorded losses of -10.3% and -14.7% over the same period”.

What about 2023?

For EY, the year 2023 promises to be rich in IPOs even if activity will probably remain sluggish at least until the first quarter. “Favorable conditions appear to be in place for global IPO activity to pick up momentum by the second half of the year,” EY explained in its latest IPO market research.

“For the IPO market to become more active again, there are a number of prerequisites: positive sentiment and rising stock market performance; lower inflation and an end to interest rate hikes ; an easing of geopolitical tensions; and a reduction in the effects of the Covid-19 pandemic on the economy” reminded Franck Sebag partner at EY.

A few 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 refers to the second half of 2023 “at the earliest” as the date of the IPO. Thierry Piéton, for his part, even mentioned “the end of the year” 2023, depending on market conditions.

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

The second would therefore take the name of Evidian and would bring together activities related to digital transformation as well as those of big data and security (BDS). This split project could be finalized in the second half of 2023, with the IPO of Evidian before the end of the year, via a distribution of shares to Atos holders. And it is part of this branch that would be eyed among others by Airbus, according to Les Echos. But within the government, the candidacy of Airbus for the future subsidiary of Atos, Evidian, meets with little enthusiasm, reports BFM Business on Friday. To be continued…