European IPO Market Flourishing Driven By Companies that Flourished During COVID

Thursday, April 29th, 2021

2021 kicked off to a promising start for both UK & Europe IPOs fueled primarily by firms that expanded their bottom-line during stay-indoor restrictions, as well as e-companies and gaming stocks.

The increasing number of tech and digital companies now prepares Europe to compete better against the United States, which, so far, claims dominance in these sectors.

Results by data company Refinitive shows the stock exchanges had garnered nearly 10.2 billion throughout 16 previous public offers, as of this posting, to mark the best beginning in the IPO sectors since 2015 when it managed 9.7 billion within the same forecast period.

COVID companies lead

Over two-thirds of the fresh listings include firms that grew through the COVID restrictions— web-based firms, e-commerce stores, and gaming stocks. Among them are Moonpig, an online card retailer from the UK, mobile game maker Huuuge, and German auto-dealer Auto1.

“We have seen significant seismic forces in the eCommerce sector thanks to Coronavirus. Stuff that lasted half-a-decade have gone down in just five months,” says James Fleming, Co-executive of equity capital markets at Citigroup. 

High-Quality Companies 

Meanwhile, Barry Meyers, chief of UK equity capital markets at JPMorgan, feels this is an exciting moment for Europe because the listed companies are “high-quality firms.” 

Most of them are Special purpose acquisition companies (SPACs) – built to raise capital via an IPO for acquisition reasons. SPACs are a primary driving force in US IPOs, and Europe is following the same trend.

This exceptional performance continues despite worries that the UK IPO sector would feel the heat of Brexit and lose listings to EU stock markets. In fact, the London Stock Exchange remains the leader, having onboarded four newbie IPOS throughout the period and another two via its Alternative Investment Market (AIM) submarket.

Cornerstone Investors 

Another noteworthy trend among European IPOs is the involvement of “cornerstone investors” — shareholders who prefer to buy stocks in advance, a common practice among Asian investors.  According to Fleming, shareholders are now more willing to serve as cornerstones and involving vetting agents to increase success.” 

What Next?

US will now face cut-throat competition from UK & Europe-based counterparts. The future is bright as more big names plan to come onboard. Meanwhile, promising UK delivery service Deliveroo plans to list within 2021’s Q1. The firm, in which Amazon has a 16% stake, is already worth over $7 billion.