Nordic IPOs boom to continue through 2022 as investment banks battle for market share

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A Nordic IPO frenzy in 2020 and 2021 is expected to continue next year with larger deals, more listings in major markets and international investment banks looking for more opportunities. in addition to the region.

The IPO market in the Nordic region has flourished in recent years due to a thriving start-up scene, less onerous regulation and a large pool of institutional and retail investors, which enable small businesses to seek capital through an IPO.

The COVID-19 pandemic appears to have accelerated the trend. The total number of IPOs in Sweden, Norway, Denmark, Finland and Iceland increased by over 110% in 2020 and increased by almost 260% year-on-year to date. ‘now in 2021, according to S&P Global Market Intelligence data as of September 27. More than 40% of European IPOs in 2020 and 2021 took place in the Nordic countries.

While international investment banks topped the Nordic IPO bookkeeper rankings in 2019, they have since been largely overtaken by regional investment banks such as Carnegie Investment Bank AB (publ) and ABG Sundal Collier Holding. ASA, which gained 20.5% and 14.1% respective market shares this year, up from 7.5% and 1.9% in 2019, according to data from September 23 of Dealogic, aanalytic provider.

JPMorgan Chase & Co. and The Goldman Sachs Group Inc., which were among the top three bookkeepers on Nordic IPOs in 2019, now rank 17th and 23rd, after seeing their market share drop over the course of the year. same period at 1.0% and 0.6% versus 10.2% and 7.7%, respectively, according to Dealogic.

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Need of speed

Nordic investment banks were the first to adopt the technology and implement fully virtual roadshows during the pandemic, which increased productivity and freed up capacity, allowing them to work on more IPOs than never before, said Jonas Ström, CEO of ABG Sundal Collier.

“We can meet all the relevant investors in five days instead of having three weeks on the road”, Strom told Market Intelligence.

Norwegian video conferencing company Pexip Holding ASA provided ‘proof of concept’ to others when it went public in May 2020 after a fully digital roadshow, leading to a subsequent IPO boom, Anne said. Lise Gryte, Capital Markets Partner under Norwegian Law. cabinet Wiersholm, in an interview.

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Another key driver of Nordic IPOs since 2020 has been Euronext’s growth market in Oslo, which has garnered record interest amid the need for speed in turbulent market conditions. Unlike the main Oslo Børs, Euronext Growth is not a regulated market and as such imposes fewer obligations and offers a path for small Norwegian companies who want a wider IPO.

“The uncertainties related to the pandemic in the market have led to this need to act very quickly,” Gryte said. “And Euronext Growth has become a vehicle for doing those quick quotes because the application process only takes 10 days, and you can even cut it down to five.”

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While the Euronext growth market has traditionally been used for early stage companies lacking strong cash flow, the October 2019 Kahoot list! ASA, an online education company backed by SoftBank and valued at over NKr 5 billion at the time, helped legitimize the Growth Exchange as a place for large corporations to raise capital, Gryta noted.

Quotes on Euronext Growth fell from just three in 2019 to 49 in 2020, and that number has already been surpassed in 2021, with 55 transactions to date, according to Euronext data, which includes all types of new listings, including private placements. The tech-related sectors and alternative energy companies in particular were behind these numbers. Meanwhile, a total of 10 listings took place on Oslo Børs in 2020 and 2021, while Euronext Expand in Oslo, also a regulated market, hosted none, with companies prioritizing the growing market.

Get moving in 2022

In Sweden, the pandemic had a bigger impact on appetite for IPOs during the first few months of the crisis, but the slowdown in 2020 only served to fuel “off the charts” numbers in 2021 as activity has picked up, said Andreas Dalhäll, IPO leader. for Sweden and the Nordic countries at EY, in an interview.

Sweden has hosted 76 IPOs so far this year, up from 37 in 2020 and 29 in 2019, according to Market Intelligence data. The most active industries for IPOs in the country this year include Internet software and services and pharmaceuticals.

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Dalhäll expects high levels of IPOs in the Nordic region to continue “into the first half of 2022”.

“From our point of view, there is no trend for the market to slow down, and we are getting launch calls every week now,” said Dalhäll, adding that the “massive recovery in IPOs” has even caused a shortage of advisers, with EY having to turn down clients.

While much of the boom has benefited regional investment banks, some international players want to win a bigger slice of the growing pie. JPMorgan, for its part, has moved executives from London to Stockholm and Copenhagen, Denmark, while hiring locally to strengthen its field presence in those locations, as it aims to become “the leading corporate bank and d ‘investment in the Nordic region, “Klaus Thune, co-head of Nordic investment banking at JPMorgan, said via email.

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This comes as the flow of transactions in the region shifts towards larger and larger IPOs in the market. “What’s really good to see is that we have a few really big ones coming out over the next nine months, well over $ 1 billion. These are pretty rare,” Dalhäll said. . Such deals will typically involve global investment banks as joint global coordinators, he added.

Swedish investment firm Storskogen Group AB (publ), for example, could reach a valuation of around SEK 56.4 billion, or $ 6.4 billion, when it goes public on October 6. Joint global coordinators and bookkeepers include Carnegie, Goldman Sachs and JPMorgan.

ABG’s IPO pipeline has shifted to “more traditional industries” and companies with stable cash flows, Ström said, as the bank takes “a bit of a break in terms of high growth companies with cash flow in the distant future.”

“Many traditional industries have been to some extent more affected by the negative effects of the pandemic. And strong companies with good business models have now had time to prove themselves, so now is the time for them to engage. discussions with investors in terms of raising capital ”, Strom noted.

The the evolution towards the main market quotations is partly motivated by the evolution of investor demands, who have now “filled their growth portfolios”. [companies]”said Gryte.

She expects Euronext growth market uplistings to the main Oslo stock exchange to increase in December, January and February, as many growth companies have pledged to do so within a year of their IPO. stock Exchange. So far in 2021, 10 companies have transferred to the main market, up from four in 2020, according to Euronext.

SPAC listings, in which special-purpose vehicles raise funds via an IPO with the aim of acquiring an existing company, will be another driver of IPO growth in the region in the coming months, according to the report. Dalhäll.

In Norway, where the regulator has not yet authorized the listing of PSPCs but is currently assessing the matter, Gryte said Wiersholm had “many clients looking for SAVS registration opportunities ”, and she expects this type of registration to become a market in the country.


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