Upcoming highlights include Talabat Holding, a unicorn from the Gulf, and some final sell-downs as IPO lock-ups from earlier in the year come to an end.

Investors are already sitting on sizeable returns from transactions in 2024, both on a short-term basis, likely benefitting hedge funds, and across the whole year to date (YTD), a boon for long-term and fundamental accounts.

Positive returns so far for the year, across all equity deal types, means that bankers hope investors are likely to be receptive to new issues for a few more weeks before wrapping up for the year.

“We expect this week to be busy,” an ECM banker said. “There has been no shortage of inbound demand, the buyside has had a good year and still want more.

“Many think they can still get a good outcome for the year and are still keen on managing risk, the ones we speak to are ready to go.”

Source: Dealogic, all EMEA ECM FO and IPO, weighted

One last Middle Eastern mega-deal

Last week, German delivery company Delivery Hero announced the launch of an IPO of 15% of the total issued shares of its UAE business, Talabat Holding, on the Dubai Financial Market.

The IPO, which is rumoured to be sized around USD 1bn, is likely the last set piece IPO in EMEA this year and one that several investors are tracking as a chance to make even more money at year-end. There is likely to be some fear of missing out (FOMO) when it comes to the listing, the investor said.

The ECM banker, who is involved in the deal confirmed that investor interest in Talabat is high with some funds already sensitive around trying to ensure they get more of an allocation than is typical in a Gulf IPO.

“The region is clearly busy, but people are really falling over themselves on Talabat,” the banker said. “There is some hope among the buyside that Delivery Hero will be more sensitive to international demand, from both long-only and hedge fund investors.

“The thing with the Middle East is that internationals don’t typically get the share allocation they want, but there is hope among the buyside that because Delivery Hero is the seller it might be different. It has a lot of established relationships with many of these investors that the buyside is hoping will be in their favour.”

Delivery Hero declined to comment on its allocation strategies.

Talabat’s IPO follows the listing of Abu Dhabi commercial retailer Lulu [ADX:LULU], which began trading in Abu Dhabi on 13 November.

The ECM investor noted that Lulu had also been a popular deal, over 25x oversubscribed, across all tranches (excluding cornerstone investors) at the final size, but that it had not popped like many expect Middle Eastern listings to. The stock is trading around its IPO price on November 18.

The investor said that the deal may have been too large after the offering was upsized to satisfy the huge demand from 25% of the company to 30%, hiking the number of shares on offer to 3bn shares from 2.58bn shares.

But the banker noted that investors often have an unrealistic expectation that all Middle East IPOs should pop on their first days without regard to the different dynamics across sectors and countries in the Gulf Cooperation Council (GCC) countries.

Alongside Talabat in EMEA, Swedish online pharmacy Apotea is also live on an IPO; and Innoscripta, a German cloud-based compliance software company, is also considering the possibility of an initial public offering, as reported by this news service.

“The recent market rally has encouraged issuers who were already planning to list by Christmas to move forward, though it hasn’t quite been enough to bring entirely new issuers to the table,” said an ECM lawyer working on several deals. “Overall sentiment around equities is positive, but investors remain conservative with their pricing expectations.”

Last few weeks of blocks

In addition to a remaining smattering of IPOs, bankers and investors expect at least a few more weeks of an active sell-down market.

“We are getting quite a few reverse enquiries for some well-expected names that are out of lock-up, there is also quite a bit of interest in some names being sold down through block trades as part of post-IPO sell downs,” the banker said.

The investor noted that he was keeping an eye out for possible deals in Bureau Veritas, InPost and IONOS after recent lock-up expiries. All have been flagged as possible deals by this news service’s Lock-up Expiry Tracker.

Well-flagged deals in liquid names will continue to be popular, and there is a sense that sellers will take opportunities to monetise before the end of the year if they can.

The banker noted he expected a busy week this week, and then markets to be quieter in the last week of November, due to Thanksgiving, although he noted it might be possible to squeeze out some deals in the first couple of days of next week. After that, equity capital markets are truly in the end game.

Given a dramatic start to president-elect Donald Trump’s transition period, with several contentious appointments to key government roles, more equity sellers may choose to do a late-year deal rather than see what surprises 2025 might hold.