Swedish IPO Appetite Improves as Stockholm Market Nears High

The appetite for initial public offerings is growing in Sweden and more companies are dusting off plans to sell shares as Stockholm’s OMX All-Share Index approaches a record high and market volatility fades.

“I think there has been pent-up demand to raise capital on the stock exchange,” Adam Kostyal, head of European listings at Nasdaq OMX Group Inc., said in a phone interview.

Two companies have been added to Stockholm’s main market this year while nine more joined Nasdaq OMX’s alternative First North exchange. That compares with a total of five new companies for the corresponding period in 2012 and 11 for the full year. In 2011, there were 29 listings.

The development in Sweden is part of a global trend, with rising stock markets boosting confidence and lower volatility improving predictability while funds flow to the equity market from fixed income, according to Kostyal. The number of announced IPOs in western Europe have increased 8 percent to 81 so far this year and have gained 12 percent to 286 offerings in the U.S., according to data compiled by Bloomberg.

Stockholm’s All-Share Index, with 279 member companies, has gained 12 percent this year and is trading near levels last seen in October 2007 and about 10 percent below the all-time high set in July that year. The measure lost 1.6 percent to 385.8 at 11:53 a.m. in Stockholm. The Chicago Board Options Exchange Volatility Index, an estimate of volatility, is now at around 14, compared with a high of about 80 in late 2008.

Receptive Market

“To use the stock market to raise capital is a very attractive alternative for many companies,” said Kostyal, who has worked for Nasdaq OMX since 2001 and took his current role last year. “But then it’s also necessary that the market is receptive to these companies and provides the valuation and reaction that the companies are looking for and that is what we see right now.”

Vehicle inspection company Opus Group AB is the latest addition to Nasdaq OMX Stockholm. It started trading on the main market July 2 after being listed on First North since 2006. The stock has advanced 32 percent since the shift. Plans to move in the summer of 2008 were put on hold after the collapse of Lehman Brothers Holdings Inc. later that year. In January 2012, Opus again considered a shift, but shelved the plans as it was busy with an acquisition.

“So we’ve started this project twice, but had to pull the handbrake twice,” Chief Executive Officer Magnus Greko said in a telephone interview.

New Types

Opus saw the plan through this time because the IPO market has improved and the company wants to access new shareholder types, such as foreign institutional investors, Greko said.

“We have a quite large international stamp on our business and, above all, we want to keep growing internationally.”

Kostyal, 41, said next year could become even more interesting than 2013 if the market holds up and added he sees no signs of a deviation from the current positive trend.

“We try to find some kind of consistency in the dialog with the market and try to attract the market with some degree of regularity instead of having spikes, where 2011 is a relevant and comparable goal, albeit ambitious,” he said.

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