European IPO market notches biggest quarter since 2022

Investors appear optimistic about European IPO markets in 2024 

Europe's initial public offering (IPO) market is off to a strong start in 2024, driven by a handful of prominent newcomers and signaling a potential resurgence in listings for the remainder of the year. 

Data compiled by Bloomberg reveals that Europe has witnessed $5.7 billion raised through first-time share sales up to March 27, positioning the region for its largest quarterly volume in 18 months. Numerous multibillion-dollar companies are reviving their listing plans, eyeing the markets for potential IPOs as early as the second quarter. 

Galderma Group AG's $2.6 billion offering alone contributed nearly half of the total first-quarter volume, with Douglas AG, Athens International Airport SA, and RENK Group AG accounting for a large part of the remaining listings. 

Galderma, a Swiss pharmaceutical firm behind skincare brands such as Cetaphil, debuted on the SIX Swiss exchange last Friday, racing up to 62.68 francs per share. Galderma stock last closed at 63.35 CHF on March 28. 

Although some companies that deferred their IPOs last year are enticed by record-high stock markets — both in Europe and the U.S. — others remain cautious. Bloomberg data indicates that activity in European IPO markets is at its lowest level in five years. However, optimism appears to be on the rise as the pipeline is gradually opening, with more listings anticipated after the Easter holiday, according to bankers interviewed by the publication. 

Richard Cormack, co-head of equity capital markets for Europe, the Middle East and Africa at Goldman Sachs, told Bloomberg: 

“We are seeing activity in Europe revert to more normalized levels, with 2025 already gearing up to be a very busy year”. 

Success of Galderma IPO may encourage other European firms to go public 

The strong performance of certain IPOs this year has encouraged companies considering a stock listing.  

Swiss pharmaceutical firm Galderma, for instance, surged 18% above its IPO price in its market debut last Friday, standing out amidst subdued European IPO activity over the past two years. This success may prompt other contenders like Golden Goose SpA, Astara, and Puig to pursue their debuts, according to Bloomberg correspondents Swetha Gopinath and Alexandra Miller. However, not all IPOs have fared well, as Douglas shares saw a 17% decline since their debut, with investor concerns primarily revolving around the company's debt. 

In a conversation with Bloomberg, James Manson-Bahr, head of Morgan Stanley’s equity syndicate for EMEA, commented on the renewed activity in European IPO markets: 

“A confluence of good companies, increased investor confidence in market outlook and improved performance in their own funds - combined with a narrowing of the bid-ask spread - is leading to a resurgence in European IPO activity”. 

U.S. IPO markets also may see thawing in 2024 

The market for IPOs in the U.S. may also be poised for a potential upswing in 2024, fuelled by a resilient economy and expectations of three interest rate cuts from the U.S. Federal Reserve, which are expected to invigorate growth-oriented companies, according to an assessment by investment bank Renaissance Capital made late last year. 

The popular social media platform Reddit went public on March 21, marking the highest profile offering to date this year — and becoming the first social media firm to hit public markets since the Pinterest IPO in 2019.  

Although the company’s stock, which trades on the New York Stock Exchange under the ticker RDDT, surged right after the Reddit IPO, it has since retreated to just under the $50 mark heading into Easter weekend.  
 
Last week’s Reddit IPO saw the San Francisco-based firm's shares debut at $47 on the NYSE, following an IPO pricing of $34 per share. Reddit stock closed its first trading day at the $50.44 mark (up 48%) and briefly breached the $70 mark earlier this week. On March 28 — the final trading day before Easter weekend —RDDT stock closed at $49.32, following a Hold rating from New Street Research. The firm, which was the first to offer a rating on Reddit stock, said it wouldn’t change its $54 price target, adding that it expected “volatility into the first earnings report”. 

The company hasn’t scheduled its announcement yet, but New Street said it will likely come in May. 

Other high-profile IPOs that have been rumoured to take place this year include Skims, the fashion brand founded by Kim Kardashian, Discord, the instant-messaging app favored by gamers, as well as fintech companies Chime and Plaid. 

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