French IPOs: Last chance saloon?

Greg Gille
02 November 2015

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Following the shelving of Deezer’s IPO and the flotation of Showroomprivé at the bottom of the initial price range, Greg Gille looks back on a mixed year for French PE-backed listings

Comparing the 2014 and 2015 vintages for IPOs of private-equity-backed assets offers an interesting study in contrast. Last year, unquote" data recorded 13 flotations of such businesses in France – which will be remembered as an exceptionally busy window for listings across Europe – while the tally reaches nine companies so far in 2015. However, this drop in volume should be taken in context: France has actually matched the UK's performance so far this year.

Furthermore, tallying the market caps of these assets reveals that 2015 has so far seen more than €6.5bn of assets being floated, more than double the overall valuation of French PE-backed companies going public in 2014. While GPs have appeared slightly more reluctant to take to the public markets this year – perhaps understandably given the jitters experienced by the Paris bourse around the summer – jumbo floats have staged a noticeable comeback.

Eurazeo was particularly keen to start exiting some of its largest holdings with the listings of Elis (€1.5bn market cap) in February and Europcar (€1.7bn) in June. Meanwhile, Clayton Dubilier & Rice and Ardian finally pulled the trigger on the IPO of Spie following a postponement last year, with the May listing valuing the engineering group at €2.5bn.

The Spie IPO allowed its backers to reap around €240m at the time of listing. Shareholders also made hay on the Europcar IPO with €404m in proceeds, while taking home a more modest €50m in the wake of Elis's flotation.

Signs are pointing to an end for this bonanza, though. Most of the activity was concentrated in the first half of 2015, showing that private equity and venture capital houses wasted no time in taking advantage of the window of opportunity. Last week, the IPO market was under scrutiny again, with music streaming service Deezer (backed by Idinvest and CM-CIC Capital Privé among other VCs) and Accel's group discount shopping site Showroomprivé expected to set the tone for sizable technology IPOs in the last quarter.

Deezer ultimately shelved its IPO on the day the listing was expected to take place, in the face of low demand and tough market conditions. Showroomprivé did go ahead, but raised less than anticipated after pricing at the bottom of the initial range, and with shares falling by more than 10% on the first day of trading.

Mixed fortunes
In fairness to the likes of Deezer and Showroomprivé, early warning signs that 2015 would not be a walk in the park for French PE-backed IPOs were already apparent earlier this year. Most of the flotations were priced conservatively - and in line with a rocky CAC 40, declining share prices for a number of these listings could be a worry for GPs hoping for an uptick once their lock-up periods expire.

Elis, Europcar and Apax's Amplitude all listed at the bottom of their initial pricing ranges. Elis, however, jumped up to €19.50 in line with a peaky market at the end of July, before tumbling back down to its listing price of €13 at the end of October, and recovering back to €15.30 at the time of writing. Europcar has meanwhile remained steady overall despite the odd peak and trough, with the current €12.45 virtually identical to the €12.25 listing price. Amplitude went from an initial 500 cents to a high of 588 cents in late July, before turbulent trading saw shares going back down to €4.53 at the time of writing.

Spie was priced a bit more aggressively in the middle of its initial range (€16.50) and appreciated by as much as 18% in late July. It all went downhill towards a €14.75 low in late September though, before slowly climbing back up to the current €15.40. Wallix, a computer security software business backed by Auriga, listed at €10.50 in June but saw its share price steadily plunge in the following months to a low of 793 cents, before recovering to 883 cents at the end of October.

All eyes will now be on Oberthur Technologies to see whether 2015 can end on a high note for large French tech businesses. The smartcard technology company, owned by Advent International since 2011, confirmed plans to list on Euronext Paris before year-end a few days ago. Shareholders will hope for a valuation in excess of €2bn, which is reportedly the price tag they were eyeing when the business was being circled by the likes of Carlyle and Eurazeo earlier in the year. Based on the experiences of Oberthur's fellow IPO candidates, timing could be more of the essence than ever.