Frankfurt and Zurich poised to eclipse London in expected IPO flurry

Frankfurt and Zurich are poised to lead a European stock market listing revival, with bankers anticipating a busy September driven by a pipeline of high-quality assets and potential spinoffs, despite Europe still significantly trailing the U.S. in capital raised year-to-date. This resurgence contrasts sharply with London's worst IPO performance on record, attributed to post-Brexit equity outflows, signaling a notable shift in European equity capital market activity.

Analysis

A significant geographical shift is occurring within European equity capital markets, with Frankfurt and Zurich poised to lead a revival in IPO activity, displacing London from its traditional leadership position. This development is underscored by London's record-low IPO volume, which has raised only $208 million year-to-date, a stark contrast to the $16.7 billion raised during the same period in 2021, a decline attributed to sustained equity outflows following Brexit. Conversely, optimism is building for the German and Swiss markets, driven by a strong pipeline of anticipated listings. Bankers from Bank of America and Morgan Stanley project a busy September, with the pipeline described by Goldman Sachs as "very German-centric." Specific high-quality assets expected to come to market include pharmaceutical firm Stada and prosthetics maker Ottobock in Frankfurt, along with potential large-scale spinoffs from Continental and ThyssenKrupp. Despite this regional resurgence, it is crucial to note the broader context: European listings have raised $7.2 billion year-to-date, still lagging far behind the $41 billion raised in the U.S., indicating that while the internal European dynamic is changing, the continent as a whole is still recovering from a sharp downturn.

Key Decisions for Investors

• Investors should re-weight their focus for European IPO opportunities from the UK towards German and Swiss exchanges, which are demonstrating a stronger and more active deal pipeline.
• Monitor upcoming listings in the German industrial and healthcare sectors, particularly from companies such as Ottobock, Stada, and potential spinoffs from Continental and ThyssenKrupp, to gain exposure to this regional revival.
• Consider that investment banks with strong German equity capital markets desks, such as Bank of America and Morgan Stanley, may benefit from the anticipated increase in deal flow in the second half of the year.
• Remain cautious of macroeconomic risks, as the article notes that previous IPO plans were derailed by tariff-related volatility, and the current optimism for a September revival could be similarly disrupted by any new market shocks.