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Pax Italiana: Southern European exchanges hope to catch up to dominant Italy

A power shift in Southern European IPOs from Iberia to Italy has shown little sign of slowing down with the country now one of Europe’s hottest IPO markets, albeit at a time of reduced volume across the continent, but other southern exchanges are hoping to catch up this year and next.

Spain was Southern Europe’s dominant IPO market for over a decade, regularly holding the largest share of new listings among Southern Europe’s largest four economies; Spain, Italy, Portugal and Greece.

In 2007 for example, there was USD 15.6bn of IPO paper printed in Spain across 10 new listings compared to just USD 5.8bn in Italy, although Italy had more transactions; 32 deals.

In 2015, USD 9.5bn of IPO paper in Spain, following on from USD 6.5bn in 2014. In 2017, USD 4.3bn of IPO volume was priced in Spain, across six IPOs, but Italy edged ahead with USD 6.3bn across 31 transactions.

Italy’s strength as a market has been a steady stream of small and mid-cap IPOs, recently augmented with larger transactions like the EUR 2bn IPO of Nexi [BIT:Nexi] in 2019.

In the fallow year of 2022, 29 listings were still printed on Italian exchanges, including the EUR 712.5m IPO of Technoprobe [BIT:TPRO] and a EUR 480m IPO of Industrie De Nora [BIT:DNR].

Momentum has continued into 2023, with the IPOs of Euro Group Laminations [BIT:EGLA] and Lottomatica [BIT:LTMC].

Can a new power rise?

Italy has a spate of new listings in the pipe, likely to maintain its advantage over the rest of Southern Europe’s exchanges, including possible listings of Banca Progetto, Newcleo and Italcer, as reported by this news service.

But there are some significant names being worked across Europe that might make the spread of issuance a little broader.

In Spain, gaming company Cirsa is hoping to re-start IPO work and Spanish hydrogen company Calvera remains of interest to investors given its ESG credentials.

But sources say it’ll be hard to turn around Spain’s IPO fortunes after several years.

Spain tends to have a low household savings rate, compared to other European countries. This means that the market tends to be weak when it comes to equity investment, particularly IPOs, relying instead on debt and foreign capital, according to one local dealmaker.

In a world of higher interest rates and possible recession, less local money to put to work is a problem for all potential Spanish issuers.

But there are opportunities elsewhere across Southern Europe. In Greece, the privatisation of Athens International Airport is heating up and the deal, which could be between EUR 800m and EUR 1bn, even at the lower end, would mean the best year for Greek IPOs since 2006.

And in Portugal, banks have been selected on the listing of hospitals operator Luz Saude.

While there is little to suggest that Italy will lose its crown as the top IPO market in Southern Europe, momentum breeds momentum.

Should AIA be successful more Greek IPOs could follow, and a steady flow of Portuguese deals would likely be welcomed onto the market.

Spain’s domestic investor cash shortages aside, the country was formerly a popular investment destination among international IPO investors and could be again should deals price and trade up.

Italy’s dominance of Mediterranean IPOs might feel akin to Rome’s mastery over its Mare Nostrum but shoots of activity across the rest of Southern Europe may give investors more options.

Borsa Italiana might soon have some challengers.

Analytics by Raj Saiya