Sometimes small success stories don’t get the credit they deserve. One such story in 2023 has been Italy’s Euronext Growth IPO market where there have been almost 30 listings in a year where large-cap issuers have struggled to go public.

Smaller deal sizes and more focused local support, often secured well in advance of a listing, has listings smoother on the growth exchange than those on the main market; even those that have made it to the main segment like Lottomatica [BIT:LTMC] and EuroGroup Laminations [BIT:EGLA] have struggled with aftermarket performance.

According to Dealogic data, there have been 28 Euronext Growth IPOs so far in 2023 for around USD 271m. While deal volume YTD is down from USD 964m in 2022, the number of deals is already higher than the 25 priced last year.

Typically, the exchange had been dominated by special purpose acquisition vehicles but since issuance of that asset class has slowed, the flow has been replaced by traditional IPO issuers.

The latest listing of 2023 on Euronext Growth involved a company that had been eyeing a considerably larger IPO.

SBE Varvit [BIT:VARV], a fasteners company owned by the Vescovini Group, opted to downsize its IPO last month to an offering of around 3% of its equity value, on the EGM rather than the main segment of the Italian Stock Exchange. The deal was backed by a cornerstone investor in the form of an investment vehicle promoted by syndicate bank Equita.

Given difficult market conditions, other companies with a pressing business need to do an IPO are exploring the idea of gaining access to public markets "by the backdoor", as one adviser put it. “The important thing is to get there,” he noted.

Another benefit is that, once listed on EGM, candidates can then shift to the main listing segment, meaning the endgame is only slightly delayed.

EGM pipe grows 

Centro Software, a EUR 16m-turnover Italian software company, has begun preparations for an IPO, as reported. G&G Compositi, a company that designs and processes advanced composite materials, AFT Group, Forever Bambu and BolognaFiere are also all names tipped for listings on the popular exchange, as reported by this news service.

The adviser warned that volatile market conditions have affected his own pipeline, and that while RFPs are still being sent out, only a handful will attempt a deal before Christmas.

But still, the idea has proved popular, and one ECM banker who is used to acting on large deals said that the EGM solution might prove appealing for other prospective main market IPO candidates such as Banca Progetto, Epta, Chiorino and Feralpi, which have either postponed or extended the timeframe of their IPOs to protect high valuation projections.

“I'm satisfied," said Alessandro Vescovini of his company’s EGM debut. “We put a little foot inside. A small seed planted in the ground. The 2.5% of our shares that we care a lot about. Now it's our turn to use this tool. This is a means, not an end,” he said.

Sometimes it is better to take a win where you can, no matter how small.