Galderma's strong performance on its debut day on the Zurich stock exchange has injected optimism into Europe's IPO market. This comes just after the lukewarm reception of German retailer Douglas' listing. Galderma's IPO, the largest in Europe since Porsche's in September 2022, has reignited hopes for a vibrant public offering scene.
Despite the setback from Douglas, whose shares fell over 12%, Galderma's shares surged above their issue price shortly after trading began. This positive momentum was mirrored in the U.S. as Reddit's stocks soared by more than 48%.
Antoine de Guillenchmidt of Goldman Sachs highlighted the global and European positivity surrounding IPOs, indicating a robust pipeline of deals for the upcoming quarters. This sentiment is critical as the IPO market had seen a decline for two consecutive years.
The spotlight was on the performance of private equity-owned firms like Douglas and Galderma, especially as the market for mergers and acquisitions hit a ten-year low, putting pressure on buyout funds to liquidate assets and reinvest.
With a staggering $3.2 trillion in unsold assets held by private equity firms, the easing of central bank interest rates has made IPOs an attractive exit strategy. This sentiment is supported by successful listings like Renk's on the Frankfurt Stock Exchange, which doubled its issue price since its debut.
Both Douglas and Galderma expedited their IPOs to capitalize on the favorable market conditions. Despite Douglas' challenges, Galderma's IPO raised about 2 billion Swiss francs, with shares opening 15% above the final IPO price.
However, the mixed outcomes of recent IPOs suggest a cautious but optimistic approach to future listings. Firms like Permira and Apollo are preparing for IPOs, indicating ongoing interest in public offerings as viable exit strategies for equity backers.
EQT, CVC, Apollo, Bank of America, Goldman Sachs, Morgan Stanley, and Noerr are among the key players navigating this evolving landscape, ready to leverage opportunities as investor confidence gradually rebuilds.
