Last year, European tech companies raised almost 40 percent less money on the stock market than in 2015. However, the volume of private placements remained stable.
The investment bank Bryan, Garnier & Co. (here an interview with Munich Managing Partner Falk Müller-Veerse) examines Europe's tech investment market. The analysis found that the volume of IPOs by European tech companies plummeted from €10.7 billion in 2015 to €6.7 billion in 2016. The number of IPOs fell from 59 to 52.
During the same period, the volume achieved through private placements remained stable at just over €8 billion. The number of these transactions increased from 217 to 255. Unlike an IPO, shares in private placements are not offered publicly but only to a specific group, such as large investors.
For the first time since 2012, tech companies met their capital needs more privately than through public participation. However, much has changed since then: five years ago, the market for private placements was still at 3.2 billion euros, while IPOs generated only 1.6 billion euros.
Upward trend in IPOs expected in 2017
According to investment bankers, Europe isn't alone in experiencing a slump in IPOs: The situation is similar in the US, where several major IPOs were thwarted at the last minute by strategic buyers. Greg Revenu, co-founder of Bryan Garnier, expects an increasing number of IPOs in 2017. He points to the IPOs of Spotify and Dropbox, among others:
"These IPOs could act as an icebreaker after Snapchat's IPO had a mixed track record, but the stock is still trading above its issue price."
Revenu predicts that this upswing will likely be felt in Europe with a six- to 12-month delay. Even in the face of major political events such as Brexit and the French presidential elections, he remains calm:
“The tech sector is relatively protected because it is comparatively less dependent on political decision-making than traditional industries, trade, or the healthcare sector.”
