European IPOs fall to lowest level since 2009

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The number of companies listing in Europe has slumped to the lowest level since the global financial crisis, underlining the dire state of the region’s market for initial public offerings amid an economic slowdown and the attraction of going public in the US.

Just 34 companies were publicly listed in Europe in the first half of this year, the lowest number since 2009 when the aftermath of the global financial crisis sent a chill through markets. 

Companies raised just €2.4bn in Europe in the first half of 2023 through IPOs, also the lowest total in 14 years, according to figures from the Association for Financial Markets in Europe (AFME). The capital raised marks a 42 per cent fall compared with the same period last year. 

European equity markets are struggling to attract companies to list this year as rising interest rates and record-high inflation force many businesses to shelve plans to go public. Others such as UK chipmaker Arm have been enticed by the larger pool of capital available in the US and chosen to list in New York instead of domestically.

“There is a recurring theme of some European companies preferring to list abroad because there’s better liquidity in the US,” said Julio Suarez, director of research at AFME. “Structurally, US capital markets are more attractive to risk capital,” he said, adding that Europe was struggling with a “structural lack of competitiveness”.

The US listings market has faced a far milder slowdown this year, with 75 companies floating in the first half and raising $11.5bn, the lowest volume and value since 2015, according to Dealogic data.

Romanian electricity producer Hidroelectrica raised €1.6bn on the Bucharest stock exchange in July, making it Europe’s biggest stock market listing so far this year. London’s biggest IPO this year was fintech firm CAB Payments, which raised £300mn last month.

Europe’s moribund listings market has provoked a response from policymakers. The UK is planning a series of reforms, which include pushing the pensions industry to channel funds towards high-growth companies, in an effort to arrest the dwindling number of companies listing on the London Stock Exchange. EU officials are also trying to simplify the process of listing in the bloc as well as improve investment research so that small and midsized firms are more visible to potential investors. 

“I think it’s getting to the point now both in Europe and the UK [where] people are realising it’s more urgent than it had been in order for these jurisdictions to keep up,” said Gary Simmons, managing director at AFME, adding “it’s becoming clearer and clearer” that European venues are losing out to the US.