GAt the twelve IPOs, the past year was disappointing for Deutsche Börse and the investment bankers who helped with the share placement. By contrast, the lucrative business with company acquisitions and takeovers (M&A) has been booming for several months.
The Germany boss of Bank of America, Armin von Falkenhayn, expects the M&A market to be lively this year as well. “The strategic dialogues are as intense as seldom, and Germany will have an exciting IPO market.”
Lots of IPO candidates
That sounds like the typical optimism of investment bankers. But the consulting company EY also considers an increase to 16 initial public offerings (IPO) in Germany to be likely in 2021. The sales platform Auto 1, the truck division of Daimler and the laboratory group Synlab are reportedly preparing an IPO. And Bank of America is mentioned as a companion to the at least envisaged IPOs of the software company Suse, the radio tower division of Vodafone (Vantage Towers) and the oil and gas production company Dea-Wintershall, which is majority-owned by BASF. In an interview with F.A.Z., von Falkenhayn comments on these specific stock market candidates. not, but asks: “When do you have such a full pipeline of possible IPOs at the beginning of the year?”
Good capital market environment necessary
As a prerequisite for a good IPO year on the German stock market, Falkenhayn’s colleague Thorsten Pauli says: “The prices only have to move sideways and fluctuate as little as possible.” By “only move sideways”, the person responsible at Bank of America for the stocks business in German-speaking countries means Pauli, that after the deep fall in March with the imposition of the first corona lockdown, share prices have recovered so strongly that sellers of not yet listed companies are now smelling attractive prices on the stock exchange. It is also important, however, that the prices of comparable companies do not fluctuate too much while stock market aspirants use their price ranges to attract investors.
Different strategy than Deutsche Bank
In contrast to Deutsche Bank, which has stopped trading stocks and is relying on its core competency in bonds and currencies in investment banking, Bank of America continues to operate its own stock trading and is ranked second among the most important banks in Germany. “If you as a bank want to receive orders from a company that follow an IPO, such as transactions such as capital increases or share package sales, then you have to know what is going on in the share. Who buys and who sells, of course, first and foremost know the supervisors of the leading trading houses, ”says Pauli.
Stock and bond traders usually close their books by early December, and investment bankers are barely involved in transactions either. But a lot is different this year. “There are hardly any no-go periods. If nobody is allowed to go skiing and everyone has their smartphone next to them on the sofa, nothing speaks against transactions right at the beginning of the year, ”says Pauli. Thanks to the corona vaccines, 2021 will hopefully be the year shops and airports will reopen. The economic recovery will continue and cause a rotation away from stay-at-home and digitization stocks towards stocks of the old economy on the stock exchange, adds von Falkenhayn.
Corona trends remain
“But some of the Corona year will remain, such as the trend towards telemedicine and learning from home,” says Pauli. “There will be quite a while less flown, the video conference is now fully accepted, and that means you can work more from home in the long term,” admits von Falkenhayn, who can hardly imagine that he will be back so often fly to New York to the corporate headquarters like before. This shows that a company like Deutsche Lufthansa with a high proportion of business people among its passengers is likely to continue to feel headwinds.