European IPOs Cling to Gains as Listing Revival Starts to Falter

(Bloomberg) -- European companies that went public in the first half of this year have made a bright start, outpacing the broader equity market.

Most Read from Bloomberg

• Nvidia Rout Takes Breather as Traders Scour Charts for Support

• BuzzFeed Struggles to Sell Owner of Hit YouTube Show ‘Hot Ones’

• Jain Global Raises $5.3 Billion, Secures Cash From Abu Dhabi

• Wikileaks’ Assange Headed to Saipan to Plead Guilty in US Case

• Israel Court Calls Ultra-Orthodox Men Into Army as Crisis Brews

Yet, that’s not providing enough confidence for the pace of initial public offerings to continue for the rest of 2024, with political turmoil already contributing to a couple of high-profile deals getting pulled.

Companies that raised at least $100 million in their IPOs have rallied 10% on average since listing this year, according to data compiled by Bloomberg, more than the 8% gain for the benchmark Stoxx Europe 600 Index.

German industrial machinery maker Renk Group AG, which supplies the defense industry, has been the strongest performer, up 76% since its delayed IPO. That’s followed by a 59% gain for French software firm Planisware SA. Germany’s Douglas AG made the worst start, with the beauty retailer down 31% since its debut.

European IPOs have rebounded in 2024 as the region exits a mild recession and interest rates start to head lower. The value of listings in the region this year has already reached around $14 billion, close to surpassing 2023’s haul, according to data compiled by Bloomberg.

However, events in France have upended markets, casting doubt over the outlook.

President Emmanuel Macron’s decision to call parliamentary elections shocked investors, who are now fretting that advances at the polls for Marine Le Pen’s far-right party could potentially lead to increased government borrowing. French bonds have sold off, while the CAC 40 Index has fallen around 4% over the past two weeks.

Lewis Grant, senior portfolio manager for global equities at Federated Hermes Ltd., said that he is more optimistic about further first-time share sales in 2025 than for the remainder of this year.

“In what was already a year of hugely consequential elections, we now see further geopolitical uncertainty with the potential to stifle investor sentiment,” Grant said. “Both issuers and investors may think twice in this environment and the resurgence in IPOs may be on pause until we can weather any market volatility.”

There has already been evidence to support that view. In the past week, Golden Goose Group SpA pulled its Milan IPO amid worries the sneaker maker’s shares would fall post-debut, Bloomberg News has reported. Meanwhile, Spanish clothing retailer Tendam postponed its listing until after the summer, according to Reuters.

--With assistance from David Morris.

Most Read from Bloomberg Businessweek

• How Jeff Yass Became One of the Most Influential Billionaires in the 2024 Election

• Why BYD’s Wang Chuanfu Could Be China’s Version of Henry Ford

• Corporate Women’s Gains Fall Victim to Anti-Woke Backlash

• Independence Without Accountability: The Fed’s Great Inflation Fail

• How to Do a Four-Day Workweek That Actually Works

©2024 Bloomberg L.P.