(News Bulletin 247) – Vinfast, Arm or Birkenstock… More and more companies are giving in to the lure of a listing outside their original stock exchange, and particularly in the United States. The search for visibility and a more solid investor base are the main arguments cited by these companies to justify this “exile”.
Vinfast, ARM, Birkenstock… These three companies from very different sectors have one thing in common, that of having tried the stock market experience outside their borders. The first company is a Vietnamese car manufacturer whose first steps on the stock market were more than noticed last August. Vinfast joined Wall Street by merging with a SPAC, an empty listed shell whose aim is to buy a company to facilitate its IPO.
Created in 2017, the company hopes to make a place for itself in the United States by offering cheaper models than its famous rival Tesla and a monthly battery rental system, supposed to lower the bill for the customer. But so far, the company has never turned a profit, according to CNBC. The company’s young stock market history has seen significant volatility. After a thunderous start, the stock is trading around $12 on the Nasdaq on Wall Street, far from the record reached at $82 at the end of August.
“Half of IPOs in the United States come from abroad”
Another notable introduction was that of the semiconductor group Arm, a division of the Japanese conglomerate Softbank, itself present in telephony and Internet access services. Arm is a British company which was bought in 2016 by Softbank, and which thus snubbed the London Stock Exchange for its return to the stock market for the benefit of Wall Street. It is the largest initial public offering (IPO) of the year on Wall Street and even in the world, and one of the largest in the technology sector since Alibaba’s in New York in 2014.
“Half of U.S. IPOs in the first half of this year came from abroad, an all-time high, led by Chinese, Canadian and Israeli companies. These companies are coming to find a larger investor base , who can better understand their business, with more comparable securities, and who are often willing to pay a higher valuation,” explains Ben Laidler, global market strategist at Etoro.
This is also Birkenstock’s future bet. The once-unloved German sandal maker is counting on its resurgence in popularity to ensure the success of its Wall Street IPO and raise more than $1.5 billion on the occasion. The brand has indeed collaborated with big names in luxury such as Dior, Valentino and Givenchy. Birkenstock especially benefited from tremendous exposure in this summer’s hit film, Barbie. The outfits worn by actress Margot Robbie have become iconic fashion pieces, including the Arizona model in Light Rose suede leather from the Birkenstock brand.
“The timing of this product placement couldn’t have been more perfect: it not only capitalizes on the marketing buzz surrounding this summer’s blockbuster. It also draws attention again to the German shoe manufacturer just before its IPO planned in the United States”, reported this summer the German economic daily Handelsblatt.
The temptation of double listing
Once exiled, some European companies are thinking of reconnecting with their roots. This is the case of the American perfumer Coty (but of French origin), which took its first steps on the professional section of the Paris Stock Exchange on September 28 as part of a double listing. Coty has in fact been present on Wall Street since 2013. The group, founded in Paris in 1904 but which was firmly anchored in the United States, had expressed its wish last spring to move closer to Europe to gain visibility.
And it is Paris, the land of its origins, which was favored by Coty in order to strengthen its presence in Europe and “to offer an additional means of reaching untapped investors in the market”, explained the company last May. The group thus intends to offer itself an additional showcase by being present in Paris, the City of Lights being considered the epicenter of global luxury.
Moreover, this sector is clearly the dominant sector, with a cumulative capitalization representing 35% in total of the CAC 40 by integrating LVMH, Hermès, Kering but also the cosmetics group L’Oréal, also referred to under the acronym “KHOL” . This figure increases to 38.56% by adding EssilorLuxottica, sometimes included in this sector by financial analysts covering luxury.
“Paris is the historic cradle of beauty, and the sector still has a particular appeal for investors in the region,” underlined Peter Harf, president of Coty.
In this luxury sector, Prada is also considering a dual listing in Europe, a bit like Coty. The company acknowledged in July that listing on the Milan Stock Exchange was a possibility but tempered enthusiasm somewhat by ensuring that it was not a strategic priority.
“A dual listing in Europe would open the stock to a new group of investors and potentially increase liquidity if the family was willing to sell a little more of its stake at any given time without being diluted,” HSBC said in a dedicated note. with the Italian label. The company’s current free float is only 20%…
The difficult exile of French companies abroad
French values are also tempted by adventure outside our borders to gain visibility. Since the 1990s, several French companies have wanted to be listed in the United States in addition to being present in Paris. Or quite simply without being listed beforehand in Paris like Business Objects, a pioneer in data mining, which entered the Nasdaq in 1994, modestly raising around thirty million dollars. In 2008, the company was the subject of a friendly takeover bid (OPA) from the giant SAP, for nearly… 4.8 billion euros.
The Nasdaq is in fact the preferred home of these companies at the forefront of innovation in need of visibility and investors able to understand their economic model. This is particularly the case for biotechnology companies which can access greater financing thanks to a more receptive ecosystem on the other side of the Atlantic.
The latest is Abivax, which announced at the beginning of the week that it had filed its Form F-1 registration document with the SEC, the American stock market watchdog, as part of its IPO project in the United States. . The company specializing in the modulation of the immune response in patients suffering from chronic inflammatory diseases announced last August this proposed listing across the Atlantic with a view to finding the necessary funds for its treatment against Crohn’s disease.
Abivax has been listed on the Paris Stock Exchange since June 2015 to develop its therapeutic vaccines against AIDS and hepatitis B, before specializing in inflammatory and intestinal diseases.
Before this company, more than ten French companies launched on the stock market across the Atlantic. And for the most part, in the biotechnology sector like DBV Technologies, which wanted to seek additional funds to finance the continued development of its peanut allergy treatment, Viaskin Peanut. Or Cellectis, the specialist in genome editing tools for the treatment of serious diseases which entered the Nasdaq in 2015, eight years after its introduction in Paris.
And success is not there for most of these companies, as we mentioned in a previous article devoted to the stock market journey of these rare companies that have tried the experience of listing in the United States.
Of all the French biotechs listed across the Atlantic, the latter have seen their share price drop on average by 80% compared to their introductory price, the heaviest declines being suffered by biotechs such as Cellectis, DBV Technologies. or Biophytis which lose more than 90%
on the Nasdaq.
The L’Occitane case in Hong Kong
The United States is not the only land of exile preferred by French companies. Remember that the French group L’Occitane favored the financial center of Hong Kong in 2010 to increase the exposure of the group (founded in 1976) to the Asian market, its first client, which then represented 40% of its sales between April and December 2009. L’Occitane, which owns the Melvita and Erborian brands, thus became the first French company to be listed in Hong Kong.
“The image of L’Occitane in Asia, the significant share of Asia in consolidated sales as well as the strong development prospects of this region explain the choice of Hong Kong”, explained Reinold Geiger to justify his choice. In 2010, the market context in Europe was also different. Stock market Europe was struggling with the Greek debt crisis, which threatened to spread to the entire European Union.
A return of L’Occitane to Europe was also in the pipeline. In July, Bloomberg News claimed in July that its president Reinold Geiger was studying options to buy back the brand’s shares that he does not yet own, using a holding company that held more than 70% of its shares.
He had studied the possibility of a new listing of L’Occitane in Europe from next year and even in Paris, according to Bloomberg. But this scenario was swept aside a few weeks later. Its majority shareholder finally abandoned the idea of delisting the cosmetics group from the Hong Kong Stock Exchange.
courses stopped on October 5, 2023
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