Matas to unlock the Nordic IPO market?

Traditionally a subdued public market, the previous most recent listing on the Copenhagen exchange was that of Danske Andelskassers Bank in July 2011.

But CVC Capital Partners acquired a majority stake in Danish beauty products retailer Matas for DKK 5.2bn in 2007 and, after ample speculation, the GP, together with fellow owner Matas Materialisternes Invest, floated the company on 28 June this year.

Matas is the ninth company to list on the Nasdaq OMX Nordic main market in 2013. It is also the largest IPO on that market since 2010.

Jan Johan Kühl, partner at Danish private equity firm Polaris, sees this as a sign of the IPO market's increasing importance in the Nordic region. "With increasing share prices in recent years, there is a renewed appetite from private investors for IPOs as an exit route," says Kühl. "We will be following Matas closely to see how the company performs."

Raising investor demand
The Copenhagen stock exchange's main index since the start of 2013 has increased by 11%, which has helped raise investors' demand for share issues. In terms of pricing, IPOs in the region are more attractive as it also improves potential stock offerings. "There is usually a reluctance from institutional investors to buy shares in private equity-backed companies," Kühl says. If Matas turns out to be a success, this could change the situation.

Head of capital markets at Danske Bank, Mikael Ericson, predicted in the beginning of June that the Nordics is on the verge of a more active public market over the next two years, particularly in Denmark. While Norway's oil sector traditionally relies on the stock exchange for funding and Sweden has the region's largest market, Finland remains relatively quiet.

According to Adam Kostyál, senior vice president of Nasdaq OMX Corporate Client Group Nordics & EMEA, there is an increased level of interest in shares globally and this is echoed in the Nordic countries. "This trend of an increased interest for private equity-backed companies to list on the IPO market can be seen in Scandinavia too," explains Kostyál.

"Matas has been an incredibly successful listing with approximately 50,000 new retail investors and the share price rate was received well. In short, this will strengthen the IPO prospects for the future," he continues.

Among the companies that could be due for a listing are Welltec and ISS. They could be looking at an IPO within a few years, according to reports. Danish state-owned Dong Energy is also heading in that direction, but only when conditions are viewed as "attractive", according to the Danish government.

Kostyál points to Christian Hansen and Pandora as previous notable Nordic listings. While Christian Hansen has proved to be a resounding success, Axcel-backed Pandora did well on the stock exchange during its first six months, initially generating high returns. The crash that subsequently hit Pandora in 2012 put pressure on an already strained private equity/public market relationship.

Kostyál doesn't agree that investors are wary of private equity-backed businesses going public. Instead, he deems it an attractive place for the asset class. "Investors like companies with strong owners and private equity firms are very involved in the process as the business goes public. In the US, almost one third of the IPOs this year so far have come from private equity. There is no reason why this could not be the case in Europe."

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• Topics
• Nordics
• Exits
• CVC Capital Partners
• Polaris Private Equity
• EQT
• Denmark