IPO market weak again in 2023 - recovery expected in the course of 2024
- Three IPOs in the Prime Standard in 2023 - significantly less than the average since 2010.
- Total issue volume decreases to 1.9 billion euros - the second-lowest figure in the last 10 years.
- Negative share price performance for all new stock market entrants.
- Kirchhoff Consult expects around 10 IPOs in 2024 if conditions become more stable.
- Market for new bonds from medium-sized companies: Significant recovery in 2023 at a persistently low level.
Hamburg, 07 December 2023 – In 2023, only three companies were floated on the Prime Standard in Germany. Although this is two more than in the previous year, it is significantly less than the long-term average of seven IPOs since 2010. The total issue volume fell significantly to 1.9 billion euros (2022: 9.1 billion euros) - the second-lowest figure in the last ten years. In the previous year, Dr. Ing. h.c. F. Porsche AG managed the second-largest IPO ever carried out in Germany, while this year there was no billion-euro IPO.
Jens Hecht, CFA, Managing Partner of Kirchhoff Consult AG: “As in the previous year, the German IPO market was very weak in 2023. This was less due to the performance of the stock market, which was particularly strong in the first half of the year and in November. More important were the high level of political uncertainty, rising interest rates and the weakening overall economy. Investors were therefore very cautious. As soon as we see more positive signals again, the IPO market will pick up. Many companies are on hold.“
All new issuers with share price losses
The share price performance of the three new stock market entrants in 2023 has been negative each since their IPO. On average, the shares lost 15.6% (as at 30.11.2023). This continued the trend of previous years: Only 38% of companies that were floated in the Prime Standard since 2019 recorded share price gains in the year of their IPO. In contrast, the DAX 40 increased by 16.5% over the course of the year (as at 30.11.2023). Share prices thus performed robustly despite higher interest rates, economic weakness and international conflicts.
More new bonds for medium-sized companies again
On the market for new bonds for medium-sized companies, 23 new bonds were issued by the end of November - compared to only 16 in 2022 as a whole. The total issue volume amounted to 1.03 billion euros - an increase of well over double (2022: 400 million euros). The proportion of full placements remained at the previous year's low level of 44% (2022: 44%). Nevertheless, the companies achieved a total of 84% of the target volume, significantly more than in the previous year (2022: 64%). The average coupon rose by 0.9 percentage points to 7.5%. This year, most of the bonds - five each - came from the renewable energy and financial services sectors.
Recovery in market for IPOs expected in 2024
After 2022 was already a difficult year for IPOs, this trend continued in 2023. Remarkably, the three companies that successfully floated in 2023 came from three different sectors. This shows the receptiveness of the capital market for companies that convince with their individual business models. For 2024, there is already a long list of companies preparing or aiming for an IPO. They could use the emerging windows on the capital market for their IPO. The candidate pipeline includes companies from the mobility sector such as DKV Mobility and Flix, Solarisbank (fintech) and Personio (HR software).
Whether the opportunity for an IPO arises will depend on the robustness of the stock market in the face of more difficult economic and political conditions. The global economy and the German economy in particular have cooled noticeably. Geopolitical conflicts such as those in Ukraine and the Middle East are causing further uncertainty. In addition, the ECB has raised key interest rates to 4.5% in 2023, so that other asset classes have become more attractive compared to equities. Nevertheless, analysts expect the DAX to be well above 17,000 points by the end of 2024.
Under these conditions, Kirchhoff Consult expects the IPO market to pick up in 2024 - but first in the second half of the year. Both the number of IPOs and the placement volume should increase. The market for new bonds from medium-sized companies is likely to reach a lower volume than in 2023 due to the interest rate environment.
Jens Hecht, CFA, Managing Partner of Kirchhoff Consult AG
Jens Hecht, CFA, Managing Partner der Kirchhoff Consult AG:“In recent years, investors have been paying more attention to the earnings prospects, ESG criteria and share price potential of IPO candidates. Intensive preparation, good timing and, above all, a realistic valuation are therefore crucial for a successful IPO. There are some promising companies that have taken this path. We therefore expect around 10 IPOs in 2024.“
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