CEE IPOs failing to pick up in Q1

The 13 listings recorded in Q1 across Europe, worth a combined €9bn, compare favourably with the 12 IPOs, worth a total of €9.7bn, seen over the whole of Q4 last year. The figures are also encouraging when put against the more buoyant Q1 2014, which saw 19 listings amounting to a combined €15.2bn, given the markedly different market conditions.

But not all European markets have fared equally. While the UK has been storming ahead with a raft of flotations this year, neighbouring countries have not been as buoyant. GPs in the CEE region, in particular, have failed to capitalise on the appetite displayed elsewhere in Europe – in fact, the listing of Hungarian low-cost air carrier Wizz Air in February has so far been the only IPO of a CEE portfolio company recorded by unquote" this year.

The flotation proved successful for the Indigo Capital-backed business, at least. The company set the share price for its London debut at £11.50 and sold around 23.3 million shares, raising £268.6m and valuing the business at £600m. Selling shareholders - comprising senior management, current and former employees, and other investors, including Indigo – reaped a total of £103m (€140m) from the flotation. Shares have so far been performing well since the listing, with the share price of £13.5 at the time of writing representing a 15% increase just a month after the float.

But the pipeline of CEE-based candidates seeking an IPO on local markets or in London appears to be running very dry, as the head of a prominent CEE corporate finance practice points out.

The writing was already on the wall in 2014; while the number of IPOs soared everywhere else in Europe, unquote" recorded just four listings of portfolio companies headquartered in the CEE region, down from six in each of the two previous years. The ongoing tensions between Ukraine and Russia, and the resulting caution displayed by international investors, were notably blamed for bringing several potential IPOs of Russian businesses to a screeching halt.

Fortune favours the brave
That is not to say that those who took the risk to list a CEE portfolio company last year took a beating, though. Firms that listed on the Warsaw Stock Exchange, in particular, have managed to build value in the following months.

Abris-backed Alumetal achieved a €128m listing in July last year, with shares priced at PLN 35 apiece rather than the PLN 44 initially mooted. The stock has been rising steadily since, however, and at the time of writing shares were trading at PLN 53.5. Not that Abris is likely to benefit from the uptick, though – the GP sold its entire 55% stake as part of the IPO.

Another Abris portfolio company, Masterlease Polska, priced shares at PLN 44 for its €126m IPO in April. The business fell slightly on its first day of trading, but registered a nice uptick throughout H2 last year with a PLN 55.5 peak in November.Trading has been rockier since the start of 2015, although shares were still trading above the IPO price at the time of writing (PLN 50.8). Abris partly divested its stake in the 2014 listing, but remained invested in order to benefit from further upside.

Another business that listed in Warsaw last year, Krokus-backed Polwax, has seen its share price rise by around a quarter post-IPO. Polwax priced its listing at PKN 15 per share in October – the stock has enjoyed an uptick since the start of 2015 and is now trading at PLN 19. Krokus sold half its stake in the listing but remained a significant shareholder.

One of the rare Russian businesses to have braved the markets in 2014, TPG-backed supermarket chain Lenta, did not fare as well. Despite listing in London rather than Moscow, shares dipped immediately following the February IPO (which raised $952m and valued the business at $5.4bn) given the escalating tensions between Ukraine and Russia at the time. Shares started trading at $10 and, despite the day-one dip, climbed steadily to reach nearly $14 in July. The stock has been on a downward trajectory since then, however, and currently trades at $6.60.

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