• Over USD 4.2bn of investor returns by IPO class of 2024 so far
• EMEA IPOs outperform Stoxx 600, S&P 500 and Nasdaq YTD
• Size doesn’t always matter with well-structured smaller deals outperforming

Europe’s IPO market looks in fine shape after looming storm clouds cleared up over the summer. The market saw a spate of cancellations before summer, but remarkable trading performance for companies that have listed since then means investors should be well disposed to put money to work in the autumn.

IPOs in Europe, the Middle East and Africa (EMEA) as a whole have generated profits of around USD 4.2bn for investors in the year to date (YTD), as of market close on Monday August 26, according to Dealogic data. Around 76% of the profits came from Europe, EMEA’s biggest market for equity issuance, according to calculations from this news service.

The profits represent around a 22.65% market return YTD. In comparison, Europe’s Stoxx 600 has risen by around 8.6% since the start of the year; The S&P 500 has risen by over 18% and the US NASDAQ by just over 20%.

While two of Europe’s biggest cash generators were also two of its largest deals, the listings of Galderma [SWX:GALD] and CVC [AMS:CVC], many of EMEA’s other top performative deals have been smaller IPOs, like Germany’s RENK Group[ETR:R3NK], France’s Planisware [EPA:PLNW] and the UK’s Raspberry Pi [LON:RPI].

Some big deals, like Galderma and CVC, were big success stories because they were sold at prices, deemed by this news service and the market, to be representative of big discounts to listed peers, meaning they were a must-buy for investors.

Other large issuers that pushed the envelope a little more on valuation have not traded so well.

Spanish luxury conglomerate Puig [BME:PUIG], while deemed an attractive company by investors, left little on the table for investors after pushing them on price. While it has still traded up, it has underperformed the Stoxx 600.

Other large IPO deals have done worse, such as German cosmetics retailer Douglas [ETR:DOU], which is down almost 18% since pricing its USD 966m equivalent IPO.

The failure of certain mid-cap names to price IPOs before the summer has cemented a narrative that smaller-cap listings won’t work in Europe and that investors are only interested in large-cap names like CVC, Puig or Galderma.

But the IPO performance stats point to a far more nuanced picture, where smaller transactions are not only being priced, but trading well and generating significant cash for investors.

Both Renk and Planisware attempted to list in 2023 but pulled back due to market jitters. When they returned in 2024, they came to market in a tight bookbuilding period with heavy allocation to cornerstones, creating scarcity.

They also both came at a fixed price deemed highly attractive to investors, with issuers seen as pragmatic, leaving money on the table for the stock to trade up.

The takeaway seems clear. Companies must be the sorts of businesses that investors really want to buy, either due to market dominance or because they fit an interesting niche that buysiders struggle to replicate elsewhere.

They also need to be compelling on discount and even good businesses that push to close to listed peer trading levels are in danger of falling flat in the aftermarket.

But with over USD 4bn of cumulative profits from EMEA IPOs so far this year, the buyside is sitting on healthy gains and should be encouraged to put more cash to work if deals are attractively priced.

This news service has previously highlighted the IPO of Springer Nature in Germany as the likely landmark deal in 2H. There is also noise around the listings of Zabka Polska in Warsaw, as reported.

Even if supply is constrained, demand should mean that issuers that do decide to brave the autumn have every chance of success, should they be pragmatic.