Philips Lighting and Maisons du Monde each rose on their European stock market debuts on Friday, providing a rare bright spot for initial public offerings after one of the dimmest starts to the year since the aftermath of the financial crisis in 2009.
Shares in Philips Lighting, the spin-off of the lighting business of Dutch conglomerate Philips, gained more than 10 per cent on its float price of €20 a share. French homeware brand Maisons du Monde saw its stock rise by 5.9 per cent after pricing at €17 per share.
The upbeat openings came a day after Danish utility Dong Energy said that it planned to price its IPO between DKr200 and DKr255 per share. The top of the range would give it a market cap of up to DKr106.5bn ($16bn), which would be the world’s biggest stock market listing this year.
“There is a definite appetite for [IPOs] at the moment, ahead of the summer recess — and the markets have picked up a lot,” said Andrea Williams, senior fund manager for European equities at Royal London Asset Management.
These floats come after a difficult beginning to the year when turbulent markets discouraged some companies from listing. The pan-European Stoxx 600 index fell 17 per cent between the start of the year and mid-February.
The total value of European IPOs in 2016 to date is 59 per cent below the equivalent period last year. Globally, IPO volumes have fallen by 48 per cent compared to the same period in 2015, falling from $65bn to $34bn this year, according to Dealogic.
The performance of Friday’s debuts suggests that some investors are more willing to bet on company’s long-term growth prospects.
Dong Energy, which is part owned by both the Danish government and Goldman Sachs, has tried to list three times previously. Now the deal is proving interesting to investors as it is the largest offshore wind operator in the world and a chance to take a view on a shifting energy industry.
JPMorgan, Morgan Stanley and Nordea are joint global co-ordinators and joint bookrunners on Dong Energy.
Maisons du Monde priced at the bottom end of its €16.50 to €22.50 range, but Philips Lighting came in at the middle of its €18.50 and €22.50 range.
Although the Stoxx 600 has risen by 15 per cent since its nadir, the IPO market took longer to return. Two offerings in Spain from pizza delivery company Telepizza and amusement park operator Parques Reunidos spooked investors by performing poorly in initial trading. Telepizza lost just under a fifth of its value on its debut.
Global value of IPOs so far this year, down 48% from the same period in 2015
“There was a lot of concern around IPOs post-Telepizza and the IPO market is about sentiment,” said Suneel Hargunani, head of equity syndicate at Citigroup for Europe, the Middle East and Africa.
He added that now investors were becoming disciplined and were focusing more on the particular business case for each listing. “What we’ve seen is that accounts on the buyside have gone back to evaluating IPOs individually,” he said.
Citigroup, Goldman Sachs and Société Générale led the flotation of Maisons du Monde, while global coordinators for the sale of Philips Lightings were Goldman Sachs and JPMorgan.
Get alerts on IPOs when a new story is published