This shortage of innovation and investment significantly dampens Europe’s Initial Public Offerings (IPOs) market.

As of early December 2023, European IPOs garnered only USD9.2 billion, contrasting starkly with the USD20.3 billion raised in the US. This represents a 35 per cent decline for Europe compared to 2022, while the US witnessed a staggering 157 per cent increase. Additionally, prominent European companies like Birkenstock, Oatly, and On Running are opting for US stock exchanges, exacerbating the situation. The absence of a unified European market compounds these challenges, yet innovation in Europe requires robust policy support. Policymakers must devise creative solutions beyond regulatory adjustments, emphasising the need for funding and financial backing to rejuvenate innovation and bolster IPO activity.

Red tape

European innovation is underfunded and burdened with labyrinthine regulations. This situation is reflected in the small number of IPOs in Europe, especially when compared to the rest of the world. European IPOs made up 2.31 per cent of global capital in 2019, and by the period from Q1 to Q3 2023 this had been reduced to 1.17 per cent.

France Digitale, the largest start-up association in Europe, claims that the lack of European investment into start-ups can be attributed to regulatory barriers that limit the extent to which institutional investors in the EU can fund new companies, while making it riskier to start a company in Europe than in other jurisdictions. Pension funds in the US are far more likely than their European counterparts to invest in venture capital (VC), and this relative lack of pension fund investment is not compensated by other institutional investors. While the US’ lax regulatory landscape on pension funds may not be right for Europe, this situation illustrates the extent to which EU startups have trouble raising the necessary funds to innovate or go to market. 

Indeed, European tech companies are estimated to have raised USD45 billion in 2023 – down from USD82 billion in 2022 and over USD100 billion in 2021. What’s more, according to PwC’s IPO Watch Europe series, most IPOs in Europe have occurred outside the EU in recent years. Indeed, in the first three quarters of 2023, 33 out of the 44 large IPOs in Europe were not in the European Union.

Public investment into research and development is also especially low in Europe, which removes much of the public sector support that startups enjoy in other regions of the world. Just 2.27 per cent of EU GDP is spent on innovation, compared to 3.45 per cent in the US, 2.40 per cent in China and 4.81 per cent in South Korea.

The European Round Table for Industry (ERT) has called to integrate European capital markets by creating a capital markets union with the intent to abolish internal barriers. This would certainly help institutional investors fund start-ups and lead to more IPOs, but the root cause runs deeper than that, and the lack of IPOs is burdened by an adverse macroeconomic environment, in addition to a sub-optimal investment landscape.

Economic hindrances

The period of high interest rates is making it more difficult to take new companies to market in the EU, as capital is harder to come by than in previous years. This also helps explain why in 2023 and 2022 an increasing number of European companies went public outside the EU. However, interest rates are not the full story. Türkiye is the country with the most IPOs in 2023 – yet its central bank recently raised its main interest rate to 40 per cent, making the ECB’s key interest rate of 4 per cent look meagre in comparison. 

It should be noted that IPOs in Europe have grown in value and quantity for four consecutive quarters from Q4 2022 to Q3 2023. However, if European economies are to remain competitive this growth will need to accelerate, and IPOs and value will need to be created in a wider swathe of the continent, rather than a handful of hotspots.

The surge in private capital and acquisitions is outpacing IPO growth, contributing to a decline in IPOs. In recent years large corporates have increasingly opted to buy their would-be competitors before they go public, a trend taking place in the US as well as in Europe. This means that many companies that may have gone public are instead shelved, harming innovation. 

Conclusion

Public investments in research and development coupled with support for private ventures are crucial but insufficient on their own. Europe requires new institutional frameworks to enhance its attractiveness for bringing innovative ideas to market. Establishing a capital markets union would facilitate investment flow to talented entrepreneurs within Europe, while safeguards against anti-competitive practices are essential to protect startups from being absorbed prematurely by larger incumbents. 

Currently, Europe’s innovation and startup ecosystem lacks the momentum necessary for sustaining competitiveness in the medium to long term. Urgent action from investors and policymakers is needed to redirect the trajectory before Europe’s position becomes irrecoverable in the global landscape.

After a record-breaking first half of the year, global IPO activity has slowed down in the third quarter, driven by inflation concerns, tightening of the monetary policies by central banks, supply chain disruptions, and worries about the post-lockdown economic recovery. Although the total value of deals hit USD112.3 billion, down from USD122.3 billion in the same period a year ago, it was still the most active Q3 in recent years in Europe and the United Kingdom.

While the global IPO activity slowed down over the past few months, following a generally quieter summer period and a pause for Chinese IPOs in the US, the European market has seen a variety of businesses coming to the market across different sectors, including financials, healthcare, technology, consumer and industrials.

The Wall Street Journal and Dealogic data also showed that Europe witnessed much stronger IPO activity and bigger YoY growth than other regions. Over the past ten months, the total value of IPO deals in the European market hit USD89 billion, or 75 per cent higher than in 2019 and 2020 combined.

US companies raised USD218.2 billion in IPO deals since the beginning of the year, 101 per cent more than in the same period a year ago. The total value of deals in the Asian market jumped by 46 per cent YoY to USD132.2 billion as of last week. The Middle East and Africa also witnessed impressive growth, with the total value of IPOs soaring by 320 per cent YoY to USD12.2 billion.

Statistics show JP Morgan is the number one advisor on IPOs in Europe this year, with USD9.22 billion worth of deals year-to-date. Goldman Sachs ranked second on Europe’s IPOs bookrunner list, with USD5.86 billion worth of deals between January and October. City and Morgan Stanley follow, with USD5.56 billion and USD5.07 billion, respectively.

Although all the largest sectors in the European market saw impressive year-over-year growth, statistics show the tech industry still leads in the total value of IPO deals. Over the past ten months, European tech companies completed USD25.6 billion worth of IPOs, significantly up from USD9.3 billion in the year-ago period.

European finance companies have raised almost USD17.5 billion through initial public offerings since January, showing a massive 962 per cent increase YoY.

The healthcare sector witnessed USD8.34 billion worth of IPO deals over the past ten months, a fourfold increase compared to the same period a year ago. Utility and Energy sectors follow, with USD4.8 billion, and USD4.69 billion, respectively.

JTC will provide administration and registry services for the new vehicle. The listing of Disruptive creates a structure aimed at acquiring another company within the financial services sector throughout Western Europe and/or Northern Europe, though the potential target has not been publicly identified. It is also the first SPAC on Euronext Amsterdam to be listed and traded in sterling

SPACs are publicly traded vehicles with the sole purpose to create a merger with another publicly traded company. They have gained popularity in Europe through 2021 as a result of various regulatory changes, which have made them an attractive method for acquisitions.

James Tracey, Managing Director – JTC Guernsey, says: “We are delighted to have been part of Disruptive’s successful listing on Euronext and I’d like to personally thank my team for their hard work and dedication. With JTC’s presence across Europe, we were able to provide support in the Channel Islands and the Netherlands, based on the particular needs of our client.”

Dewi Habraken, Director – Netherlands, JTC, adds: “This listing further demonstrates that the appetite for SPACs in Europe is continuing to grow as regulators adapt to demands from investors and sponsors. Euronext is maintaining its position as the venue of choice for SPACs at the moment and we are pleased that Disruptive has recognised JTC’s extensive expertise with listings across European exchanges and domiciles.”

Edmund Truell, executive director of Disruptive and founder of private equity firm Disruptive Capital, says: “We are delighted to have worked with JTC to list Disruptive Capital Acquisition Company on Euronext Amsterdam. This marks a significant development for Disruptive Capital as we look forward to buying a large business in the European financial services sector; and benefitting from additional access to public capital markets. 

“Our team has decades of successful business acquisition and transformation experience, so it was the obvious choice to partner with JTC who share our high-levels of expertise and commitment to service delivery over multiple locations.”

JTC’s offices in the Channel Islands, London and Amsterdam have seen increased interest for SPACS listed on The International Stock Exchange (TISE), the London Stock Exchange (LSE) and Euronext respectively over the past year.

The largest sustainable property developer in the UK and a company with 125 years’ history of sustainably manufacturing wood products are among the latest bond issuers to be admitted to the segment.
 
TISE Sustainable was launched in July as a comprehensive and reputable enabler for increased capital allocation towards environmental, social or sustainable activities. It provides qualifying issuers and their securities with enhanced connectivity, credibility, transparency and visibility among investors with minimal administrative burden and no additional fees. 
 
Carey Olsen Corporate Finance Limited has acted as listing agent for both Canary Wharf Group Investment Holdings PLC and PCF GmbH on their respective listings on TISE and admissions to TISE Sustainable.
 
Anthony Byrne, Head of Bond Markets at TISE, says: “I am delighted to welcome both Canary Wharf Group Investment Holdings PLC and PCF GmbH to listing on TISE and admission to TISE Sustainable. The segment is Europe’s most comprehensive sustainable market segment, offering issuers enhanced connectivity, credibility, transparency and visibility among investors. It is hugely pleasing to see a growing number of bond issuers availing of the segment through alignment with recognised green and sustainable finance frameworks, such as those from the International Capital Market Association (ICMA).”
 
Canary Wharf Group Investment Holdings PLC is part of the Canary Wharf Group (CWG), which is the largest sustainable developer in the UK with over 11 million square feet of sustainable certified buildings. CWG is the developer of the largest regeneration project in Europe, that as a commercial and residential property company is responsible for owning, managing and developing the regeneration of 128 acres of the once-derelict Docklands district of East London and turning it into a sustainable 24/7 community.
 
Canary Wharf Group Investment Holdings PLC has three bonds listed on TISE which are aligned with the ICMA Green Bond Principles.
 
PCF GmbH (Pfleiderer) is headquartered in Germany and a leading manufacturer of premium engineered wood products, laminates and resins. It was founded in 1984 by Gustav Adolf Pfleiderer and since its beginnings more than 125 years ago, Pfleiderer has attached great importance to sustainable management and development, from ecological and economic as well as social points of view. 

The Isle of Man Treasury GBP400 million 1.625 per cent Sustainability Notes due 2051 have been listed on TISE’s Qualified Investor Bond Market (QIBM) and admitted to its sustainable market segment, TISE Sustainable.
 
The issuance is in line with the Isle of Man Government’s newly-established Sustainable Financing Framework, which is aligned to the International Capital Market Association (ICMA) Green Bond Principles, ICMA Social Bond Principles and ICMA Sustainability Bond Guidelines, and which has received a Second Party Opinion from Sustainalytics. The eligible projects covered in the Sustainable Financing Framework include clean transportation, energy efficiency, affordable housing, education and healthcare.
 
HSBC acted as Sole ESG Structuring Advisor. Anthony Byrne, Head of Bond Markets at TISE, says: “I am delighted to welcome The Isle of Man Treasury’s GBP400 million sustainable bonds to listing on our recently launched Qualified Investor Bond Market (QIBM) and admission to our sustainable market segment, TISE Sustainable. This listing from The Isle of Man Treasury is another milestone in the ongoing growth of TISE as a major European market for professional bond issuances, including those supporting environmental, social and sustainable initiatives. My thanks to all transaction parties involved for engaging directly with TISE from the outset in bringing this significant sovereign issue to listing on the QIBM.”
 
The bonds are rated Aa3 by Moody’s and were offered under standalone documentation. Banco Santander S.A., Barclays Bank PLC and HSBC Bank plc acted as joint lead managers with international law firm Dentons acting as lead counsel to the joint lead managers. 
 
EY acted as Independent Financial Advisor. Clifford Chance LLP acted as Legal Advisor to The Isle of Man Treasury team.
 
Caldric Randall, Chief Financial Officer at The Isle of Man Treasury, says: “We are very pleased to list these bonds on TISE. We have been delighted by the strength of institutional demand for our debut issue of sustainable bonds. This demonstrates that investors recognise the Isle of Man’s fiscal strength and, through our new Sustainable Financing Framework, the Government’s commitment to protecting and enhancing the environment in the Isle of Man as well as investing in the community for the long term. I would like to thank the team at TISE for their responsiveness in ensuring a smooth and efficient listing.”
 
Cains Advocates Limited acted as lead Isle of Man Counsel to the Treasury on the transaction and Cains Listing Services Limited (CLSL), part of the Cains Group has been appointed to act as listing agent for The Isle of Man Treasury in respect of the listing.
 
Carolyn Gelling, Head of Equity Markets at TISE and lead in the Isle of Man for TISE, says: “With TISE having had a presence in the Isle of Man since 2017, we are extremely pleased to see this domestic sovereign bond list on TISE. This further demonstrates the ecosystem which has been built up in the Isle of Man around listings on TISE, which has brought a new revenue stream to the island from both local listings and those facilitated through local professional services firms. Furthermore, it is a pleasure to be able to assist in an issuance which is intended to bring a range of environmental, social and sustainable benefits to the Isle of Man.”
 

The 507 securities listed between the start of January and the end of June this year represents a 30 per cent increase on the previous record set in 2020 and took the total number of listed securities on TISE’s Official List to 3,431 at 30 June 2021.
 
Charlie Geffen, Chair of TISE, says: “I am delighted that we have built on our strong performance in 2020 by delivering record listing volumes in the first half of the year. We are continuing to make good progress on executing our strategy to sustain future growth and I look forward to reporting on further developments in the coming months.”
 
During the first half of the year, TISE retained its position as one of the leading European venues for listing high yield bonds. There were 59 securities listed in the first half of the year, including issuances from pan-European telecommunications firm Altice, cruise company Carnival, beauty business Coty, hire car firm Hertz and supermarket chain Iceland.
 
TISE has also seen strong growth in securitisation business. There were 45 securities listed on the market in the first six months of the year, which is more than in the entirety of 2020 and included transactions involving leading financial services firms Barclays, CVC and Morgan Stanley.
 
In the first six months of 2021, TISE has also built on its position as the second largest market for listed UK Real Estate Investment Trusts (REITs). There were 10 new UK REITs listed between the start of January and the end of June, which is more than in all of 2020 and included REITs backed by Man Group and Starwood Capital Group. There are now 38 UK REITs listed on TISE, which represents more than 40 per cent of the listed UK REIT market.
 
Earlier this week, TISE announced the launch of a comprehensive sustainable market segment, TISE Sustainable, and that it had become a Partner Exchange of the United Nations’ Sustainable Stock Exchanges Initiative (UN SSE). The new segment features a green bond listed on TISE earlier this year by Novelis Sheet Ingot GmbH, an indirect wholly-owned subsidiary of Novelis Inc. which is the world’s largest recycler of aluminium.
 
As part of the strategy to develop its secondary markets proposition, TISE has announced that it has reached agreement with Avenir Technology (avenir-technology.com) to supply a price discovery and trading solution. The new platform is designed to operate on an auction basis, but with the ability to configure and accommodate continuous trading if desired.
 
Cees Vermaas, CEO of TISE, says: “It is a fantastic achievement to set a new record for listings in the first half of the year. This has been a tremendous effort by the team who have also been working hard to develop our proposition as we seek to build on our position as a major European professional bond market by diversifying our products and markets and scaling up our operations and distribution.
 
“A key part of this drive for continued growth is the implementation of the new price discovery and trading solution. The flexible structure will deliver all the necessary functionality and capacity required for us to progress our strategic objectives. Both the auction and continuous trading features will enable us to deliver even greater value to our current issuers, as well as offering new products and services to a whole new range of potential clients.”
 

The Guernsey-domiciled closed-ended investment company, which raised USD253 million through its initial placing, will invest in a diversified portfolio of vessels, which will primarily be second-hand geared ships.
 
Following its admission to trading, Taylor Maritime Investments has confirmed the simultaneous acquisition of 17 vessels from multiple vendors. It is targeting an annual dividend yield of 7 per cent, with the first quarterly payout estimated to be 1.75 cents per share for the period ending September 2021.
 
Working alongside onshore counsel Norton Rose Fulbright, the Carey Olsen team advising on the Guernsey legal and regulatory aspects of the admission was led by partner Ben Morgan, with assistance from senior associate James Cooke.
 
Morgan says: “We are delighted to have advised Taylor Maritime Investments on its successful admission to the Main Market of the London Stock Exchange. The company boasts an experienced executive team with a strong track record of raising and deploying capital within the shipping sector and it was pleasure to advise them on this exciting project.
 
“The listing also serves as the latest example of Guernsey’s position as the number one jurisdiction for non-UK companies looking to list on the London Stock Exchange.”
 
PFS, part of the global PraxisIFM Group, has been appointed to provide administration and corporate secretarial services to Taylor Maritime Investments.
 
PFS managing director David Le Boutillier says: “I echo Ben’s comments and we’re delighted to have worked with the Carey Olsen and Taylor Maritime teams on this successful admission. As one of the leading administrators of listed funds we welcome Taylor Maritime to our portfolio of clients.”
 
International Fund Management Limited (IFM), which is also part of the PraxisIFM Group, provided the fund with PRIIPs services.
 

Despite the economic impacts of Covid-19 in 2020, the number of listings the firm’s Cayman Islands listing team managed increased by 6 per cent, and impressively the team listed 54% of all BSL / MM CLOs listed on the CSX. 

In 2020, 505 listings were recorded on the CSX with specialist debt securities, including CLOs, representing the largest proportion of new listings.  This growth in new business reflects the CSX’s ability to provide a proportionate regulatory environment for the streamlined and cost efficient listing of a wide range of securities for a variety of issuers and jurisdictions. These figures reinforce the CSX’s position as a leading platform for CLOs with a recorded total of 57 CLO issuers listed (an increase from 54 in 2019), comprising BSL/MM new issuances, refinancing and resets.  

Scott Macdonald, partner and global head of finance, says: “We are incredibly proud to be the number one listing agent on the CSX for 2020. Throughout 2020, we continued to demonstrate our capabilities as the go-to Cayman Islands listing agent with the expertise and abilities to provide innovative, novel and responsive services and solutions.”

The Group’s global listings team is an acknowledged leader in listing services with specialist teams based in its Cayman Islands, Dublin, Hong Kong, Jersey, London and Luxembourg offices.

Novelis Sheet Ingot, an indirect wholly-owned subsidiary of Novelis Inc, has had EUR500,000,000 3.375 per cent Senior Notes due 15 April, 2029 admitted to TISE’s green market segment, TISE GREEN.
 
Novelis is the leading producer of flat-rolled aluminium products and the world’s largest recycler of aluminium. The net proceeds from the bonds will be used to finance eligible green projects, such as investments in renewable energy and pollution prevention and control.
 
Anthony Byrne, Head of Bond Markets at The International Stock Exchange Group, says: “We are delighted to welcome Novelis’ green bond to listing on TISE and its admission to TISE GREEN. Such admission clearly demonstrates the attraction to both issuers and investors of a robust and credible market segment for green bonds. TISE GREEN raises the profile of, and facilitates the flow of capital into, initiatives which finance projects that protect or enhance the environment. A growing pipeline of enquiries indicates a continued flow of green and sustainable listings to the segment in the coming months.”
 
Novelis has engaged Sustainalytics, an independent environmental, social and governance and corporate governance research, ratings and analytics firm, to help develop a green bond framework, define the eligible green projects and assess the processes for alignment with the Green Bond Principles (produced by the International Capital Markets Association).
 
Ogier Corporate Finance Limited advised Novelis in respect of the listing on TISE and worked alongside the issuer’s counsel, Fried Frank, Harris, Shriver & Jacobson (London) LLP.
 

Digital 9 Infrastructure plc is a newly established, externally managed investment trust, which will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The portfolio will comprise future proofed, non-legacy, scalable platforms and technologies including (but not limited to) subsea fibre, data centres, terrestrial fibre, tower infrastructure and small cell networks (including 5G). The Company will focus, primarily, on digital infrastructure investments which are operational and with an existing customer base.
 
Following the completion of the offer, the Company will acquire Aqua Comms, a platform owning and operating some 14,300km of the most reliable and resilient trans-Atlantic sub-sea fibre systems – the very “backbone” of the internet.
                 
Jack Waters, Chair of Digital 9 Infrastructure plc says: “The Board is delighted that such a broad and deep investor base is as excited about D9 as we are. As planned, our first acquisition will be into Aqua Comms, a platform owning some 14,300km of modern, operational trans-Atlantic subsea fibre, representing the true backbone of the internet. We expect to close this first transaction next week, underpinning our 6p dividend target. As a board we look forward to working together with Triple Point in rapidly deploying the rest of the proceeds into other critical digital infrastructure assets.”
 
Thor Johnsen Head of Digital Infrastructure at Triple Point Investment Management LLP, says: “We appreciate the fantastic support from a broad range of institutional and advised retail investors. We would like to thank them for their confidence in Triple Point and in sharing our excitement for the opportunities in digital infrastructure. We have collectively experienced the digital transformation in our society over the last few decades (and particularly in the last 12 months), and we believe we are at the dawn of a broader transformation. Together with the initial cornerstone investment into Aqua Comms, D9 will be focused on global investment into the critical infrastructure driving this unstoppable force of change. Importantly, at the heart of the D9 investment thesis will be ESG considerations of digital inclusion and environmental impact.
 
“We have a deep pipeline of assets we are working on and we are excited about updating shareholders on these soon.”
 
The Directors have subscribed for, in aggregate, 130,000 Ordinary Shares at the Issue Price. 
 
The Wider Triple Point Group (including funds managed by the Triple Point Group) have subscribed for, in aggregate, 6.5 million Ordinary Shares at the Issue Price. 
 
Thor Johnsen, head of the Investment Manager’s Digital Infrastructure team has subscribed for 250,000 Ordinary Shares at the Issue Price. Andre Karihaloo and Arnaud Jaguin, both members of the Investment Manager’s Digital Infrastructure team, have each subscribed for 25,000 Ordinary Shares at the Issue Price.  
 
Applications have been made for the admission of, in aggregate, 300 million Ordinary Shares to trading on the Specialist Fund Segment of the London Stock Exchange’s main market for listed securities. 
 
A total of 267,011,661 Ordinary Shares (which includes the 2 Ordinary Shares issued on incorporation of the Company) will be admitted to trading and dealings will commence on the London Stock Exchange at 8.00 am on 31 March 2021. A further 32,988,339 Ordinary Shares issued on first completion of the acquisition of Aqua Comms will be admitted to trading and dealings will commence on the London Stock Exchange at 8.00 am on 1 April 2021.