French IPO pipeline heralds solid 2022 after record vintage

In 2021 to date, French exchanges have seen 34 listings for a total deal value of EUR 3.9bn. Indeed, IPO activity in France this year has already surpassed the decade's high, set in 2015, when 27 IPOs raised a total of EUR 5.1bn, Dealogic data shows.

Despite the return of inflation and the global threats fuelling market jitters – including geopolitical tensions, energy crises and raw materials shortages – most indicators point towards a resilient French IPO pipeline next year, French equity capital markets (ECM) experts agree.

"This year has proved to the world that Paris is an attractive listing venue, registering five primary offerings of more than EUR 250m," says BNP Paribas's head of ECM, Alexis Le Touzé, adding that this momentum is not going to suddenly stop in 2022.

The post-lockdown catch-up effect may not last in 2022, but the high level of liquidity, strong economic fundamentals and a promising pool of IPO candidates will keep the dealflow going, bankers say.

Among the most awaited IPO projects in 2022, market experts flagged the EUR 1bn listing of Sanofi's drug ingredient business EuroAPI. The French pharmaceutical company has mandated Bank of America and BNP Paribas, alongside JP Morgan, to run the listing.

Icade's healthcare subsidiary Icade Sante, which postponed its listing in October "until market conditions improve", is expected to try again next year.

In the renewable energy space, the listing of French green-energy firm GreenYellow, owned by supermarket Casino, is highly anticipated by investors in 2022. E-commerce group CDiscount, also owned by Casino, is still among the most cited potential IPO candidates in 2022 after it announced earlier this year it was mulling a listing in Paris.

Onward and upward
The recent pick-up in activity follows a pre-pandemic drought seen between 2016 and 2018, with the latter year recording 17 listings worth EUR 1.1bn. A slight rebound in deal value materialised in 2019, with eight listings worth a combined EUR 2.9bn, but the ride came abruptly to an end with the Covid-19 crisis. Last year, France saw eight listings worth a mere EUR 494m, Dealogic data shows.

This year, the mood music has changed. In H1 2021, music distribution platform Believe raised EUR 300m and Stellantis's online used car sales player Aramis Auto raised EUR 250m in proceeds, while its shareholders raised another EUR 200m. In September, French infrastructure fund Antin completed its EUR 650m IPO, cybersecurity specialist Exclusive Networks listed on the Paris stock exchange in a deal worth EUR 383m, while the highly anticipated IPO of French cloud systems provider OVH gathered around EUR 350m in primary proceeds.

"France's IPO market has the wind in its sails, but there were several projects that were pulled or postponed due to market conditions and France is not yet representing a massive share of the European listings value this year – just EUR 4bn vs EUR 70bn in Europe," says Societe Generale's co-head of ECM for France and Benelux, Pierre Troussel.

Like Icade Sante, Bain-backed car parts seller Parts Holding Europe (PHE) also failed to raise EUR 450m in its H1 2021 IPO.

IPO candidates that succeeded this year proved to investors they had an attractive equity story in a sector with clear growth prospects, ECM experts agree.

September-October saw a very high level of IPO activity, but also heightened investor selectivity: the most attractive candidates were the larger companies, with international presence, a proven track record, solid growth prospects (even if at the expense of profitability) and a strong and incentivised management team, according to Paul Mihailovitch, JP Morgan's managing director and head of ECM for Benelux and southern Europe.

"Resilient sectors – including tech, healthcare, energy transition and infra – will continue to drive the dealflow," Troussel notes.

France's IPO pipeline should also stay relatively unscathed by the upcoming presidential election in April, unless a given IPO candidate has the state among its main shareholders or operates in a heavily regulated industry, say ECM experts.

La French tech
In the local tech space, there is a strong reservoir of potential IPO candidates, but they will not necessarily contemplate a listing as soon as next year, market watchers say.

French digital minister Cédric O, who spearheads the government's effort to encourage a growing network of French innovative tech firms, told a French weekly news magazine that the country now had "20 startups with a unicorns status, versus three or four only four years ago."

French startups raised more than EUR 5bn this year, according to a recent French treasury's report, with four or five firms raising more than EUR 200m each and now firmly in IPO territory.

Those candidates include French AI-based digital experience analytics firm Contentsquare, home improvement marketplace ManoMano, online retailer of refurbished IT products Back Market and digital employee-benefits card provider Swile.

The listing of cloud provider OVH has shown that a French tech firm aligned with the government's strategy to spur tech innovation in France can succeed, Le Touzé notes.

However, the IPO route will not be the best option for every single tech unicorn, as they are not all prepared to respond to rigorous financial publications and markets' volatility, ECM bankers say.

The startups recently valued at more than EUR 1bn after their latest fundraising rounds will most likely aim towards an IPO in 2023 or 2024, Troussel says, adding that the listing readiness work usually lasts 18 to 24 months for potential candidates.

With analytics by Izaz Ansari

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