Autodoc’s decision to halt its listing last week carries a hard lesson for other European IPO hopefuls about the need to price deals conservatively despite the strength of wider equity markets.

The German e-retailer cancelled its Frankfurt IPO on the last day of bookbuild, despite being three times covered, according to reports by this news service last week.

“Autodoc’s situation is frankly emblematic of where we are with European IPOs right now,” said an ECM banker. “Markets are what they are, and frankly, they’re not being particularly accommodating. When you’ve got a solid business like Autodoc, undoubtedly good fundamentals and market positioning, yet they still pull the plug, that tells you everything.”

This book in Autodoc’s IPO was filled mostly by hedge funds with fewer long-only institutions with several investors pushing back on the valuation, as reported.

The challenges for Autodoc are the first real indicator that European IPOs remain harder to get across the line than the performance of the Stoxx 600 would suggest they should be; the European benchmark is up around 16% from its most recent low after US President Donald Trump’s “Liberation Day” tariff announcement on 2 April.

There were some idiosyncrasies around Autodoc that perhaps made the deal trickier, including the presence of private equity giant Apollo as a minority investor, which set a hard valuation floor on the transaction, making the company’s pricing options more inflexible, as reported.

An investor noted that for many buysiders the discussions are still centred on IPO price, which was tricky for Autodoc given Apollo’s 2024 minority acquisition which valued the business at EUR 2.3bn, the bottom of the IPO range.

“For everything that is trying to come to market the key is to price conservatively, if that happens then most of these deals can get done,” the investor said.

There are still some listings that could price before August.

Spanish gaming company Cirsa began investor education on 18 June for a listing and German Med-tech business BrainLab is set to close books on 1 July on its Frankfurt IPO.

In the same week that Autodoc postponed its IPO, Swedish gaming company Hacksaw, wrapped its Stockholm listing raising SEK 3.3bn (USD 351.9m) at SEK 77 a share, a price the investor called “very conservative”.

That said, market participants pointed to Autodoc’s difficulties as being part of a wider structural trend for European IPOs.

“A lot of investors have been caught off guard by the speed of the market rebound and, in that light, there still needs to be a lot of conviction for them to buy something and that was an issue for Autodoc,” said a second ECM banker.

Public market gap

Nervousness around IPO investing is not carrying through to listed follow-ons. In June, there has been USD 12.4bn of deal volumes in already listed stocks compared with just USD 820m of priced IPO paper.

Source: Dealogic

“It is quite striking how big the gap is at the moment between what you can get done in the listed market and what can’t be done in the IPO market,” said the second banker. “But then when you have a block trade, hedge funds can do a lot of fundamental analysis on a deal to give themselves the conviction to hold it over a short period, you can’t do the same thing with an IPO.”

The investor concurred, noting that, even with markets higher, investors are still being highly cautious around risk, he pointed to recent turmoil in the Middle East, tariff deadlines expiring in July and the rising cost of US debt as reasons why the buyside was happier leaning into familiar stocks over an unknown IPO.

But the first banker expressed some frustration that even with highly motivated sellers and favourable markets investors were, in many cases, still being highly sensitive, even on block pricing.

Dealogic’s Price of Liquidity pricing metrics, which analyses block trade pricing by comparing the size of discount to the size of stake sold, shows a slight tightening of general European block trade pricing in June, but the results are highly disparate with the weighted averages influenced by larger deals.

Apollo’s final sale in Lottomatica, for example, garnered EUR 1.2bn for the sponsor, after it sold a 21.28% stake at a tight 4.42% discount on 17 June, driven by a large anchor order as reported previously by this news service, a PoL ratio of -0.21x the percentage stake sold.

Sellers on fellow Milan-listed stock Technoprobe had to be more generous to investors in a EUR 70m sale on 10 June. The sellers sold a 1.53% stake at a 6.92% discount, a PoL ratio of -4.52x the size of stake sold, the most expensive trade for a seller in June in terms of its PoL ratio.

“Whether you’re looking at a traditional IPO or an accelerated process, you’re certainly dealing with the same pool of increasingly selective institutional investors who have the luxury of being extraordinarily picky in this environment,” said the first banker.

European ECM remains a buyers’ market.