(Bloomberg) -- Equity capital market bankers are rushing to finalize a fresh slate of deals in Europe before the US presidential election and an earnings blackout period bring an anticipated slowdown in activity.
Fueled by rallying stock markets and the anticipated easing of interest rates, companies in the region have raised nearly $76 billion across European exchanges so far this year, an increase of 17% over the same period in 2023, according to data compiled by Bloomberg.
Third-quarter dealmaking was more muted, but the past few weeks have seen a flurry in initial public offerings as well as an uptick in accelerated stock sales as the Nov. 5 US vote compresses the autumn timetable.
“IPOs for companies that are of the right quality, right size and rightly priced are getting done,” said Saadi Soudavar, co-head of ECM for Europe, Middle East and Africa at Deutsche Bank AG. While there may be a window for further IPOs after the US election, “most IPO candidates in our pipeline are aiming for 2025,” he said.
Polish convenience store giant Zabka Group SA leads October’s IPO hopefuls, as investors including CVC Capital Partners Plc are seeking to raise as much as $1.7 billion in Warsaw’s biggest first-time share sale since 2020. Academic publisher Springer Nature AG & Co. priced its €522 million ($578 million) German IPO this week, while Spain’s Europastry SA and the UK’s Applied Nutrition Ltd. could go public before the election.
In the Middle East, local investors have led more than $5 billion in IPO-activity so far this year, according to data compiled by Bloomberg. The Gulf region could see fewer interruptions in the calendar than Western markets, said Richard Cormack, co-head of ECM in EMEA at Goldman Sachs Group Inc.
“For IPOs, you start running into Thanksgiving, so we’re not expecting much activity after the election, with the possible exception of in the Middle East,” Cormack said.
The past few weeks have seen an unrelenting flow of share sales in already-listed companies as they and their shareholders take advantage of higher stock prices. Pfizer Inc. sold a £2.4 billion ($3.2 billion) stake in Haleon Plc this week.
Other recent deals include buyout groups EQT AB and Warburg Pincus cutting their stakes in Galderma Group AG and Ionos Group SE respectively after their IPOs.
“We’re starting to see an uptick in the number of selldowns from IPOs that priced this year or in previous years,” said Andrew Briscoe, head of ECM syndicate in EMEA at Bank of America Corp.
Bankers expect selldown volumes to start tapering in the coming weeks as the third-quarter earnings season’s trading restrictions near, but volumes could again flare up on the other side of the election, they say.
There could also be more fundraising by companies already listed in the coming months, as mergers and acquisitions activity returns.
“We’ve seen a lot less primary issuance from listed companies than the market would like,” said Aloke Gupte, co-head of ECM International at JPMorgan Chase & Co. “Conditions are ripe for more front-footed and M&A-related capital raises.”
Investors will be watching announcements from Danish transport and logistics giant DSV A/S, which needs to raise as much €5 billion in new equity to fund its acquisition of DB Schenker.
Bankers are confident that the market has capacity to absorb new supply, with traditional investors such as mutual funds showing up in numbers for the right transactions. High levels of share buybacks have boosted investors’ cash levels, while the positive trading of most recent IPOs shows that capital markets are working well, Goldman’s Cormack said.
“Long-only investors are definitely stepping up,” he said. “The average long-only participation in accelerated placings and even IPOs is running at multi-year highs.”
--With assistance from Farah Elbahrawy.
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