Losses in the commodities and stock markets are forcing some companies in Europe to shelve their planned initial public offerings.
But not for long, according to Adam Kostyal, head of European listings at Nasdaq Inc.
“What we’ll potentially see in terms of impact is maybe a bit of postponement, but as it is now, the interest and commitment is still there to do IPOs,” Kostyal said in an interview on Tuesday. “What we can see is that the strong year that we had in 2015 has left us with a fantastically strong pipeline for this year.”
The hunt for yield has left a clear footprint on the market for IPOs. There were almost twice as many listings in both 2015 and 2014 as in 2013. Western European companies that went public last year gained 19 percent, on average. Some did considerably better than that, with the world’s biggest airport operator, Aena SA, surging almost 80 percent since its IPO a year ago. London-listed Auto Trader Group Plc has soared almost 90 percent since its March listing.
“With interest rates as low as they are still, if you’re looking at return on investment elsewhere, then at the end of the day the equity market is still a strong alternative,” Kostyal said.
The equity market has kept its appeal as a place to raise money even after a selloff in Chinese stocks seemed to presage a new global rout. China’s benchmark index sank 17 percent this month, while oil hit a 12-year low.
Companies that do well in IPOs tend to find “anchor investors” who remain committed as volatility spikes, Kostyal said.
But for some, the market turmoil has proved too daunting. Cigar maker Scandinavian Tobacco Group, owned by Skandinavisk Holding A/S and Swedish Match AB, is delaying its planned IPO until markets calm down. Polish dietary-supplement maker Master Pharm suspended its IPO in December.
“Clearly, the volatility we’re seeing in the market now, could have some kind of impact,” Kostyal said. “What we’re seeing is some of these listings might push back slightly. Fundamentally, we still see the equity markets as being a very strong alternative for these companies to raise capital.”