Prime Standard has five initial public offerings in 2020 and thus two IPOs more than in the previous year / Issue volume collapses by almost 75 percent to less than one billion euros – lowest level since the financial crisis in 2009 / Market for new medium-sized bonds: Lower volume with fewer issues than in the previous year / Numerous postponements of IPOs give hope for catch-up effects in the next few years / Kirchhoff Consult expects a significant recovery on the IPO market with 12 to 15 IPOs in the event of a weakening of the COVID-19 pandemic in 2021
2020 was a weak IPO (Initial Public Offering) year – especially because of the COVID-19 pandemic. That is the result of the annual IPO study carried out by the Hamburg agency for financial and corporate communication Kirchhoff Consult AG. Accordingly, the number of IPOs in the Prime Standard stock exchange segment rose from three to five compared to the previous year, but was still well below the median1 of twelve IPOs over the past 30 years. At the same time, the issue volume fell by almost 75 percent to around 0.9 billion euros (2019: 3.6 billion euros), in particular because there were no IPOs with a volume of over one billion euros. The issuance market for SME bonds also developed weaker than in 2019. The number of new bonds fell to 27, but could rise to the previous year’s level of 31 issues by the end of 2020. The placement volume decreased by around 33 percent to 938 million euros (2019: 1.39 billion euros).
Klaus Rainer Kirchhoff, founder and CEO of Kirchhoff Consult AG: “2020 was an unpredictable year for IPOs. The COVID-19 pandemic and the measures to contain the virus caused high volatility in the markets. There were also uncertainties about the US election in the fall. The fact that a few IPOs have taken place shows how many sustainable companies we have in Germany. Provided that the hopes for the vaccines’ effects come true and the economy recovers, we are confident that there will be more IPOs again in 2021. “
HENSOLDT with the largest IPO of the year
The IPO market performed poorly overall in 2020 in an uncertain market environment. Numerous companies postponed or canceled their IPOs. In particular, the COVID-19 pandemic, the associated measures to contain the virus and the subsequent economic downturn caused the top German index, the DAX, to fall by around 40 percent. The number of sales and profit warnings was at a record level in the first quarter of 2020. Other indices reacted similarly. The US election was another risk factor in the fall.
Nevertheless, the share prices recovered overall, so that the DAX at the end of November (as of November 30, 2020) posted an increase of around 0.3 percent since the beginning of the year. The reasons for this were in particular the weakening of the pandemic in the summer months and the continued expansionary monetary policy of the European Central Bank, which generated high investment pressure. In addition, the US stock exchanges reached new record highs. Stocks offered promising returns. In this environment, the armaments group HENSOLDT achieved the largest IPO of the year in Germany with an issue volume of 402.7 million euros – that is more than 40 percent of the total issue volume. With Knaus Tabbert (mobile homes), PharmaSGP Holding (Pharma) and Compleo Charging Solutions (charging stations), three companies went public, whose industries grew despite the COVID-19 pandemic.
In the Scale stock exchange segment, two companies made their debut in 2020 after there had been no IPOs in the previous year. fashionette and EXASOL came together to an issue volume of around 200 million euros and thus achieved the highest value within a year in the Scale.
Medium-sized bonds again with decline
27 new bonds were issued on the market for new SME bonds by the end of November – four fewer than in 2019 as a whole. The total issue volume was 938 million euros – a decrease of 33 percent (2019: 1.39 billion euros). More new issues could follow by the end of the year. The proportion of full placements was also well below the previous year’s level at 37 percent (2019: 65 percent). The companies achieved a total of 74 percent of the targeted volume and thus less in the previous year (2019: 81 percent). The average coupon remained unchanged at 5.5 percent (2019: 5.5 percent).
As in the two previous years, bonds from the real estate sector dominated the market for new SME bonds. 10 of the 27 bonds came from the real estate or construction sector. They issued bonds with a total volume of 612 million euros. Three of the four bonds with a volume of at least 100 million euros came from this sector.
Increase in IPOs and medium-sized bonds expected in 2021
After numerous canceled and postponed IPOs in the last two years, the candidate pipeline is full. According to official information and market rumors, around 100 companies could currently aim for an IPO. Some of these companies could reach billions in market capitalization. These include Suse (company software developer), Springer Nature (science publisher), Wintershall (oil company) and About You (online fashion retailer).
Provided the current hopes for the effect of the vaccines come true and the COVID-19 pandemic becomes more manageable, some companies could use the reopening IPO window in 2021. The expansive monetary policy of the European Central Bank and positive economic development could support an attractive environment for IPOs. Analysts also assume that the DAX will have further price potential in 2021 and will rise to 14,000 points.
Against this background, Kirchhoff Consult expects 12 to 15 IPOs in 2021 to be significantly more IPOs than in 2020. At the same time, the placement volume is likely to increase significantly. The same view applies to the market for new SME bonds.
Jens Hecht, CEO of Kirchhoff Consult AG: “There are increasing signs of an economic recovery and the containment of the COVID-19 pandemic. At the same time, many attractive companies are ready for the stock market. We therefore expect a significant recovery in the market for IPOs and expect 12 to 15 new issues. The bond market should also develop positively with at least 30 new SME bonds. “
The 2020 IPO study is ready here ready for download.
(1) Median instead of mean value due to the extraordinarily high IPO activity around the turn of the millennium
Live stream today from 6 p.m .:
European champion in e-mobility – how the automotive industry combines climate policy and structural change