A year of recovery for European IPOs looks to be pretty much completed, with the successful listings of German academic publisher Springer Nature [ETR:SPG] and CVC-backed Polish retailer Zabka Group. There are a series of major deals to look forward to in 2025 and market participants are not letting the postponement of Spanish frozen baked goods company Europastry’s IPO last week sour the mood.

The two successful deals have meant that 2024 will end with a flourish, with over USD 2.3bn of IPO volume priced this month as of 14 October, according to Dealogic data.

This will grow with the expected pricing of UK supplements firm Applied Nutrition at the end of the month, should the deal cross the finish line.

Source: Dealogic

There are also a host of large new listings possible for next year accentuating the theme of European recovery in 2024. Some of the most exciting business for bankers, and opportunities for investors, come in the form of several large-cap corporate disposals that had been seen as a done deal for private market buyers.

Despite being in deep talks with sponsor GTCR, Stada Arzneimittel owners Bain Capital and CVC [AMS: CVC] are reportedly now inviting banks to pitch for IPO roles.

This momentum follows news that Dutch state-owned electric grid operator TenneT has appointed banks to work on an IPO for its German subsidiary after failing to sell the division to the German state.

This news service has also reported that IPOs could be in the works for ice cream conglomerate Froneri, owned by Nestle [SWX:NESN] and PAI Partners, as well as the ice cream division of Unilever [LON:ULVR], given the sizes of both divisions make sale processes difficult.

This news service also reported earlier this month that a listing, in the form of either an IPO or a spinoff, could also be back on the table for Opella, the consumer division of French pharmaceutical firm Sanofi.

At the end of last week, it was reported that CD&R had entered exclusive negotiations with the healthcare firm, but a reported EUR 15bn sale price would undervalue the firm compared to its listed peers, as reported, leaving an IPO, or spin, a credible alternative should negotiations break down.

“Those are all on our list for a possible listing next year,” said an ECM banker involved in several situations reacting to ECM Pulse’s initial list of big corporate IPO candidates for 2025. “These large caps are really interesting for equity investors at the moment and the reality is in some of these situations, there isn’t a private buyer for these assets – they’re just too big.”

Any company that is – or has ambitions to be – a USD 30bn to USD 40bn company has to be a public company.”

ECM investors throughout the year have prioritised investing in large-cap situations, which has led to a disparity with medium-sized assets not getting the same level of interest.

Another equity capital markets banker agreed that IPO alternatives to private sponsor-led sales are no longer just a negotiating tactic but a real alternative for sellers.

A third ECM banker noted that not only are IPOs a real alternative in large dual track sale processes but are often coming at a far better price than sponsors are offering. Sponsors have been underbidding both public equity markets and strategic bidders in several large processes this year, he noted.

“It makes sense for sellers to explore all options,” the second banker said. “But IPOs are now a legitimate exit route and not just a trojan horse.

“The market is more balanced now. We see lots of dual tracks coming next year. People are looking at both options to find the right solution for their specific needs.”

Sponsors ready deals, but must learn lessons from Europastry

Alongside corporates, several sponsors are gearing up to bring companies to public markets in 2025. A host of assets, including Spain’s Hotelbeds, Techem, UK petrol forecourts operator EG Group, Fintech firm Ebury and German retailer BestSecret, among several others, have all been reported by this news service to be possible IPO candidates.

There is also the possibility of one more IPO this year – Spanish gaming company Cirsa, although that would mean squeezing a listing into the window after the US presidential election, a notoriously risky prospect as investors look to protect returns into year-end, the US Thanksgiving holiday and European winddown to Christmas.

However, if there is a bump in sentiment after the US election, then the company’s backers might attempt to close out 2024 with a final tilt at the IPO market.

But should any sponsor attempt a charge into the public market this year or next, it would do well to consume some takeaways from Spanish frozen baked goods producer Europastry to ensure its efforts are not quixotic.

Europastry postponed an initial public offering for the second time this year on 9 October, following an unsuccessful attempt to revive an IPO it had previously delayed in June.

Several market participants said that, in their opinion, the deal was too expensive, with the prospective offer price range unchanged from the talk around Europastry’s previous IPO attempt in June, despite the fact that the share price of its closest peer, Swiss firm Azyrta [SWX:ARYN] had fallen significantly since then.

As this news service reported at the time the deal was launched, Europastry, was offering a discount well below what other IPO candidates have had to accept this year. The transaction was also launched without a pre-placed shadow book.

But, this approach was very different from that of BC Partner-backed Springer Nature, where the sponsor took a highly pragmatic approach, offering the market a far steeper discount to help the stock perform in the aftermarket. The stock has traded above offer since pricing.

“It was a case of structure rather than sentiment,” said the third ECM banker opining on Europastry’s postponement.

Europastry declined to comment for this story.

Zapka Group will begin trading on 17 October and it will warm ECM investors into the ever-darkening European winter if it joins Springer in trading up.

But deals will still have to have investor friendly structures to work, in what continues to be a market heavily favourable to buyers, as shown by the canned IPO of Europastry.