LONDON/PARIS (Reuters) - Faltering investor appetite for European stock market listings forced French energy services group Spie to pull its initial public offering on Thursday and left companies in Germany and Italy struggling to get their plans off the ground.
The prospect of an interest rate rise in the United States and worsening economic outlook in Germany are among the reasons for an equities sell-off that has hit newly listed stocks and curbed investor demand for more offers.
Spie pulled the sale of up to 1.2 billion euros ($1.5 billion) worth of shares - which would have been France’s biggest listing since before the financial crisis - on the day the offer was due to close.
Italian cosmetics firm Intercos had not fully covered its initial public offering (IPO) with just hours to go, and in Germany property firm TLG Immobilien and online classifieds group Scout24 have decided to postpone planned listings.
Meanwhile in Spain, the IPO of airports operator Aena - flagged as one of the biggest in Europe this year - is having a tough start as fewer institutional investors than initially expected have shown interest, sources said.
The disappointing stock market debuts of other European companies such as Germany’s Rocket Internet (RKET.DE) are causing investors to shy away from share offers, sources say. Rocket and online fashion retailer Zalando (ZALG.DE) lost over a fifth of their value after their listings last week.
“Investors have to focus on their core portfolios in times when equity markets are falling, which means time to focus on new issuance is lower,” said an industry banker.
“Add to that the poor performance from Zalando and Rocket Internet, and confidence in the market has taken a wobble. High quality IPOs will get done but investors need real conviction to buy into a company in these markets and that means marginal stories are struggling.”
It is not just new companies with relatively untested business models like Rocket and Zalando which are suffering from tepid investor demand. Spie was created in 1900 to work on the electrical infrastructure of the Paris Metro and counts big energy firms such as Total (TOTF.PA) and EDF (EDF.PA) among its customers. It had core profit of 315 million euros last year.
Spie, which cited “volatile market conditions” for pulling its sale of new and existing shares, said the fund-raising was postponed but did not offer a new date. The IPO would have been France’s biggest since that of French bank Natixis (CNAT.PA) in 2006, which raised 4.6 billion euros.
Sources had told Reuters on Wednesday that the IPO had been struggling to attract investors.
French stocks have suffered steep losses since early September, with Paris' blue-chip CAC 40 index .FCHI down 7 percent in the past five weeks.
Spie’s struggles could have an impact on the plans of French laundry group Elis to float this autumn, industry sources said.
The amount raised from IPOs in Europe quadrupled year-on-year in the first nine months of 2014 to a total of $55.5 billion, but enthusiasm has cooled in recent weeks because of choppy market conditions.
Italy’s Intercos had not fully covered its public share offering hours before the deal was due to close on Thursday, a communication sent to investors by one of the banks collecting orders showed.
The document, seen by Reuters, said that the IPO was expected to be priced at the lowest end of the range and was “more than three-quarters done”.
“This is a buyer’s market, not a seller‘s. Why should I buy a stock with little visibility when there are lots of stocks out there with proven records,” said Roberto Lotici, fund manager at Ifigest.
Sources had told Reuters on Wednesday that the Intercos listing was on a “knife edge”. It comes after Internet company Italiaonline pulled its planned listing on the Milan bourse on Tuesday.
“Right now the market is very volatile. And it is not positive to have so many IPOs all at once because you can’t look at all of them,” another fund manager said, speaking on condition of anonymity. “The interest of foreign investors has been fading a little.”
The equities sell-off worldwide has seen six of the 11 U.S. IPOs priced since early last week trading below their initial price on Wall Street.
In Germany, the bluechip index DAX .GDAXI has dropped almost 10 percent over the last three weeks.
TLG Immobilien and Scout24 are delaying their planned listings by several days, several people familiar with the deals said. If markets do not stabilize, the groups may opt for a further delay or even cancellation of the IPOs, they said. [ID:nL6N0S42KA]
TLG Immobilien had initially planned to publish its IPO prospectus on Thursday but is now targeting to do that early next week, three people familiar with that deal said.
“It makes no sense to push TLG into the market against the sentiment,” one of the people said, adding the IPO organizers would now evaluate on a day-by-day basis whether it makes sense to go ahead with the listing.
A European investment banker said hedge funds in particular were being very selective: “There’s maybe not a full buyers’ strike, but investors are being extremely cautious.”
Additional reporting by Andrew Callus in PARIS, Elisa Anzolin in MILAN, Arno Schuetze and Alexander Hübner in FRANKFURT; Writing by Pravin Char; Editing by Clara Ferreira Marques