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Big cheese: Switzerland looks to mega deals to spark IPO revival

Traditionally one of the big beasts of EMEA ECM, the Swiss stock exchange has fallen behind European bourses in recent years. But there are hopes that large listings in the making will lift the market to new heights in 2022.

In the years leading up to the outbreak of COVID-19, listings on the Swiss exchange had been falling as a percentage of EMEA IPO volume.

While Swiss IPOs bounced back from a poor 2020 due to the pandemic, the country lagged other European exchanges in the bumper 2021. As European IPOs struggle to gain any traction in 2022, Switzerland could benefit from being the home of some of the year’s strongest IPO candidates.

Mega deals primed for launch

Two of the most prominent European candidates – Swiss skincare giant Galderma, owned by EQT, and ABB’s [SWX:ABBN] e-mobility unit – are primed to go public, leading the European IPO revival, sources hope.

Both companies reportedly intend to list by the end of 2Q22 and the IPOs were initially scheduled to price before Easter, sources previously told this news service.

One ECM banker said he expected the two Swiss deals to be among the handful of IPOs that might have a chance of success, despite the overriding market volatility that has put so many of Europe’s prospective IPOs on ice.

Both deals could file intention-to-float paperwork in the next few weeks, sources have previously said. However, equity markets remain volatile with US indices selling off hard following the May meeting of the US federal reserve.

The CBOE Vix index is once again above 30, well above the level equity bankers are comfortable with when marketing IPOs.

Even if listings come later than both companies hope for, Switzerland still has several idiosyncratic advantages that will aid their execution.

Like Scandinavia and the Middle East, the country has a deep and committed local investor base keen to invest in homegrown companies. “The investor base in Switzerland is very strong and along with perhaps Sweden is one of the best capital markets for IPOs in Europe,” said a second ECM banker.

This strong local market is encouraging non-Swiss companies to turn to the exchange. This news service reported that Germany’s KD Pharma has picked Zurich as the home for its shares in an IPO this year. An ECM lawyer agreed that the Swiss market was becoming increasingly attractive, adding he was advising six Chinese companies on potential listings in the country.

While huge IPOs like Galderma and ABB’s mobility unit will be a boon for the SIX Exchange should they successfully priced in coming months, there continues to be a flood of smaller cap businesses that are also preparing for a listing in Zurich.

These include Swiss Clean Battery, the Swiss battery start-up, which is in the midst of a process to appoint a syndicate ahead of an IPO this autumn, CFO Peter Koch told this news service.

If markets calm down, then a Swiss revival could be on the cards.