The EY Global IPO Trends report for the first quarter of 2020 noted how global IPO activity dropped dramatically in March, due to the pandemic. The document flagged that economic activity remains vulnerable to the increasing economic disruption expected in the first half of 2020. So the report considers IPO activity would not improve “at the earliest” until the second half of 2020.
And it seems to have hit the mark, with the Dutch company Jacobs Douwe Egberts (JDE), the world’s second largest coffee producer, starting trading last week. The IPO price in Amsterdam was 31.50 euros/share. This is a transaction which has been waiting in the wings for some time and the group considers that it is now the best moment. The IPO implies a total capitalization of 15.6 billion euros. The listing is aimed at reducing part of JDE’s debt to 3.5x Net Debt/EBITDA ratio (currently 5.2x EBITDA approx). Demand from institutional investors has surpassed expectations.
JDE Peet’s, whose brands include Peet’s Coffee, L’OR, Jacobs Coffee, Douwe Egberts and Kenco, raised €700 million through the sale of new shares.
Existing shareholders Acorn Holdings – owned by JAB Holding Company – and Mondelēz sold an additional €1.55 billion worth of stock for a total of €2.25 billion, representing a 16.5% stake in the company.
From the market’s point of view this is very good news because it is the first major IPO of 2020. According to Bankinter’s analysis team:
“The exit price is in the upper part of the range set out in the prospectus (€31.50 agreed vs €30/32.25 expected). It implies a PER (Price Earning Ratio) of 26.9x vs the 23x industry average. This is very good for the market because it means there is an appetite for risk, despite the uncertainty about Covid-19. It opens the door to new operations (IPOs, takeovers, …) and reinforces our idea of a “V” economic recovery.”
Global IPO activity in the first two months of 2020 was 29% higher by number of transactions and 242% higher by revenues compared to a year earlier, largely thanks to the Asia-Pacific and US markets.