Galderma’s Strong European IPO Debut

The European IPO market witnessed a significant turn of events as Galderma‘s impressive debut on the SIX Swiss stock exchange provided a much-needed boost following a lackluster performance from German retailer Douglas (DOU1.DE). Amidst growing anticipation, Galderma’s listing emerges as Europe’s most significant IPO since Porsche’s (P911_p.DE) debut in 2022, signaling renewed investor interest in public offerings across the continent.

Galderma’s Landmark IPO Reignites Investor Confidence

Galderma, a renowned dermatology specialist, made headlines with its initial public offering (IPO) on the SIX, representing one of the largest listings in Europe in over two years. With an opening price of CHF 61.00 per share and a market capitalization of approximately CHF 14.5 billion, Galderma’s public debut signaled renewed investor interest in the European IPO landscape. The company ended on Friday at CHF 64, up 21% from its offering price, raising nearly $2.2 billion through the sale of 37.5 million shares.  

Founded forty years ago through a partnership between L’Oréal and Nestlé, Galderma is well-known for producing Cetaphil moisturizers and Dysport muscle relaxants. In 2019, EQT, a private equity firm, purchased Galderma from Nestlé, and it has now successfully transitioned into a publicly traded company. Its IPO lock-up period has been set at 180 calendar days from the first day of trading for the selling shareholders, and until September 30, 2024, for the company itself.

Navigating Market Challenges on the Path to Success

Galderma’s IPO was anticipated to be one of the biggest in Europe this year, with a strong start hopefully paving the way for other major flotations. However, those hopes seemed at risk as shares in CVC-owned Douglas took a tumble of more than 12%. But, Galderma’s shares surged above their issue price within the first hours of trading. “Sentiment surrounding IPOs remains positive globally and in Europe. Deals planned for Q2 and H2 are anticipated to proceed as scheduled,” commented Antoine de Guillenchmidt, co-head of equity capital markets at Goldman Sachs for Europe, the Middle East, and Africa, involved in the Galderma and Douglas IPOs.

This success shows an improvement in the IPO market, which experienced a downturn in the wake of geopolitical tensions and volatile market conditions since 2022. Adverse conditions have generated a rise in unsold assets and a decrease in mergers and acquisitions. With M&A volumes reaching their lowest levels in a decade, buyout funds are under increasing pressure to sell companies, return funds to investors, and deploy freshly raised capital. Similarly, the issue of unsold assets remains a challenge: Analysts at Bain & Co. noted that private equity firms are grappling with an immense $3.2 trillion in unsold assets. This hinders the process of returning capital to investors and also limits fundraising efforts. 

Optimistic Outlook in the European IPO Market

With central banks signaling a shift in interest rate policies, the stock market emerges as a promising avenue for companies seeking strategic exits, particularly those backed by private equity. Experts like Thibaut Vidart, Product Manager at SIX, and Bjørn Sibbern, Global Head Exchanges, foresee a positive shift. Sibbern notes, “After a prolonged period of uncertainty, the macro situation is starting to normalize, evidenced by the recent falls in interest rates and inflation. We have also witnessed a recovery in global equity markets.” 

Despite challenges, Europe has managed to achieve certain measures of success with IPOs. As the first newcomer to the Frankfurt Stock Exchange this year, tank gear manufacturer Renk showed promise. Despite its IPO postponed amid geopolitical tensions and interest rate uncertainty, it managed to double its issue price of 15 euros since its February debut. Now, with Galderma’s remarkable performance, the stage is set for other companies to expedite their IPO plans and capitalize on favorable market conditions, presenting potential opportunities for economic growth in Europe. 

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Author

Bernice Lottering