Friday, January 21

The bane of IPOs

In a year that was set to lay the foundations for the post-coronavirus pandemic recovery, IPOs failed miserably in European markets. And Spain was no exception.

Of the three major operations that took place in the Spanish stock market, only Acciona Energía maintained the rate. But the prick of Ecoener was more than notable, while the discrete falls of Línea Directa reveal that the former Bankinter subsidiary did not seduce investors either.

In Europe, the outlook is not very rosy either. Half of the values ​​that mark the largest decreases in the Eurostoxx 600 They went public in the last 15 months.

giants like Auto1, Deliveroo, Allegro about InPost they were marked with losses of up to 40 percent, even as the index rebounded nearly 20 percent.

Some of the companies that skated on the Old continent they were linked to e-commerce or were flagged as winners after lockdown, but the return to normal lowered investor expectations.

Euphoria in the market

In a way, “a strong market window has been taken advantage of to list companies, taking advantage of the post-Covid-19 euphoria and stimulus plans,” he told Jose Lizán, manager of Rreto Magnum Sicav.

Only in the Spanish stock market, the new additions mobilized resources worth 2,902 million euros, compared to 255 million in 2020, according to data from the recent BME markets report. And the more companies jumping onto the floor, the lower the quality.

“What we have seen is that the higher the volume, the lower the quality, and this year has reflected precisely that trend,” he said. Luc Mouzon, European Equity Research Director at Amundi.

In the opinion of this expert, investors can end up “with extremely negative returns” if they are not selective.

It is also true that it is typical for companies newly launched on the trading floor to take a while to enter the focus of investors. And in a bearish environment, this process tends to take longer

For this reason, the recent wave of risk aversion motivated by the coronavirus and by the restrictive turn of the central banks has not helped in the final stretch of the year.

The Shadow of High IPO Valuations

Still, the real problem is that many of these listed companies hit the market with excessively high valuations.

“There are some sectors on the stock market, although not all, that trade at stratospheric multiples,” he said. Lizán.

“Valuations are expensive, but not only in Europe but also in the United States, they are very outdated because the calculations are being done with zero rates,” he added. Alfonso Escárate, expert in ‘family office’ management.

In addition to this problem, many of the newly listed companies were discounting a world without the problems that rage in the final stretch of the year, especially after the restrictive turn of the central banks.

“Many valuations were driven by expectations for future growth, but some companies have seen their shares fall due to concerns about rising inflation and expectations of rate hikes,” he said. Susannah Streeter, Hargreaves analyst Lansdown.

Foreign investors look at the Spanish stock market with a magnifying glass

Of the three great premieres that were on the Spanish stock market, two are in the red. In the case of Ecoener, the falls exceed 25 percent since the premiere, while Direct line a little more than 4 percent is left.

Who better holds the guy is Acciona Energy, which is up 14 percent. In the old MAB, now christened BME GrowthThere are cases of notorious hits, such as the Intercity Football club, which loses 10 percent in just 50 trading days.

Each listed company faces its own reality, but the common pattern is that, beyond our borders, investors continue to look closely at the national market.

“What I’m seeing is that the Spanish stock market is not attractive to foreign investors and the proof is that the Ibex is one of the worst European indices so far this year,” he said. Escape.

The problems of political instability in Spain are usually the main factor that plays against Spanish listed companies, explain the sources consulted.