European Tech Firms Look To Benefit From The IPO Bonanza In The US

In order to take advantage of the billions of dollars of investor cash that has caused a record-breaking rally in the tech IPOs in the United States so far this year, some of the tech companies of Europe are getting ready to hasten up plans for a public listing early next year.

Even prior to the Covid-19 pandemic hit the US, tech sector valuations were already red hot and have touched record levels during the pandemic with investors beating the trends of a pandemic slowdown and invested in tech companies in the business of sectors such as online shopping and food delivery as they believed that these firms would not be impacted by the pandemic crisis.

According to Refinitiv data, a large section of the global listings have happened in the United States with the total value of initial public offering (IPO) thus year topping a record $81 billion.

On the first day of trading in New Yprk last week, there has been an appreciation of 115 per cent and 70 per cent in the stocks of the home rental firm AirBnB and the food delivery startup DoorDash Inc respectively.  

In comparison, only about $19 billion have been raised in total by European IPOs this year which is the lowest amount in a decade. This is partly because of the availability of more attractive alternatives for investors such as private equity deals.

However a recent report quoting an equity capital markets banker, claimed that his firm had received directions from about 50 companies of Europe to look into the prospect of a public listing and 60 per cent of those companies are tech or tech related ones.

 “There is a significant number of late stage private companies in the sector for whom an IPO is a realistic prospect in the short to medium term,” said Claire Keast-Butler, a partner with law firm Cooley.

Among those well-known tech companies looking to gloat an IPO early next year include the reviews site Trustpilot, e-retailer Moonpig, online food delivery business Delivero, cyber-security firm Darktrace and e-commerce website musicMagpie of the United Kingdom, said bankers.

Public listings in Frankfurt are being planned by digital used-car trading platform Auto1 and online e-commerce About You of Germany. And a number of French “unicorns” manhy also accelerate their already announced intention of going public.

 “After a sustained period of strong performance, musicMagpie is reviewing a number of attractive alternatives to best support our continuing rapid growth,” it said in a statement.

“As a high growth company we constantly evaluate our funding options, and regularly meet with advisers on this subject,” a Moonpig spokesperson said.

However not all of the potential IPO candidates will likely choose to gloat their IPOs in European stock exchanges. While a few may choose to make their market debut in Europe, United States is being eyed for floating their IPOs by many where there is presence of a much larger number of tech-savvier investors as well as more lenient listing regulations. 

And yet other European companies may choose to take the route of the more than 100-plus SPACs (special purpose acquisition companies) that have listed this year.

“The factor that’s most likely to hit European IPO volumes are IPO alternatives, such as SPACs and private equity,” said Darrell Uden, global co-head ECM Europe at RBC Capital Markets.

(Adapted from Reuters.com)

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