Spain IPOs do work: six out of the last seven have had a positive outcome

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In Spain, there has been a kind of urban legend regarding IPOs: that they don’t work and investors end up losing money. This has possibly been the case at some period in the past, but not now. And perhaps this is due to the fact that most of the current IPOs are almost exclusively aimed at instituitional investors, so the operations need to be more fine-tuned.
The reality is that out of the last seven big IPOs, those this year and in 2016, six generated gains and only one generated losses. Even if we include the 20 listings from the last four years, 12 were positive and 8 negative. And 2015 was a really difficult year for IPOs. Only two out of six that year turned out positive.
Airport operator AENA remains the most successful IPO. Despite the fact that analysts themselves were not particularly confident about the stock, since AENA made its stock market debut in February 2015 up to now, those who invested in it have pocketed a gain of no less than 138%. In other words, the company listed at 70 euros per share and is now trading at 166 euros.
Another IPO which produced spectacular results was that of Global Dominion, the technology and corporate services subsidiary of CIE Automotive. It made its market debut in April last year at 2,6 euros per share and is now worth 3,94 euros, a 53% revaluation in just over a year.
Experts attribute part of this success to the company’s strong growth, as well as the fact that it belongs to a group lke CIE (automobile components). This firm has also clocked up one of the biggest revaluations in the Spanish market.
Logista, the logistics, warehousing and transport company which used to belong to Tabacalera has seen an uncomparable rise in its share price. It listed on the stock market in July 2014 at 13,14 euros per share and is now worth 22,15 euros, a revaluation of 65%.
The main Socimis, which listed on the continues market in 2014, have done equally well. The only one which lost ground was Lar, which dropped 18%. The other three big ones have increased in value. Hispania saw a revaluation of 50.6%, Merlin Properties 21% and Axiare 64.5%.
So who are big losers? Telepizza, which has lost 17% of its value since it listed on the market in April last year. But this was no surprise, given that the company had already been listed on the market in the past and its performance had been very bad.
Things also went badly for Talgo, which again is hardly surprising. Despite its international ambitions, the firm has not succeeded in obtaining any contracts outside Spain and most of its business is with Renfe. It is currently worth half (4,96 euros) of what it was worth when it made its stock market debut in May 2015 at 8,4 euros per share. And it’s going to be difficult to recover its debut IPO price.
Oryzon Genomics has also lost a lot of momentum, as doubts have arisen over the effectiveness of its cancer drugs. The stock has lost half of its value since December 2015, falling to 2,2 euros from 4,6 euros.
But the biggest disaster for investors has been, without a doubt, the IPO of eDreams Odigeo, the online travel bookings company. Those who took a punt on this company have lost two-thirds of their investment. They paid 10,5 euros per share when the company made its market debut in Abril 2014, and it’s now worth just 3 euros.
The important thing is that the last few IPOs seem to be more resilient than those in the past. Of those launched in 2015, only one is now showing losses. And the three big ones this year are all winners. In just four or five months, Prosegur Cash (the transport and handling of cash) and Gestamp (components for cars) have seen a 11-12% revaluation in their stock price. Not bad at all.
So no surprise at all that there is a long list of new IPOs ready to take off – Unicaja, Cortefiel, Borges, Aernnova, Quirón, Volotea. That said, the majority of these operations were proposed during the first half of the year, when the Ibex 35 was more buoyant than at present.
These listings will foreseeably take place once the markets have left this period of correction or laterality behind and start rising once again. There is a lot of appetite for these kind of operations, although the companies on the waiting list don’t seem to be the most attractive for investors.
There are a lot of imponderables in the case of Unicaja; Volotea has the problem all airlines have, namely that they don’t usually do well on the stock market; Cortefiel is the least dynamic of the fashion retailers, also with the lowest growth; Aernnova is an industrial company, so it doesn’t really fuel much enthusiasm. But Quirón y Borges could perhaps provide a pleasant surprise.

About the Author

Fernando Barciela
Fernando Barciela has been a regular collaborator for Spain's leading daily El Pais' business section since 1994. He is also a regular collaborator on foreign policy. For Grupo Consejeros he interviews the top executives of Spain's listed companies. He was a correspondent with Diario de Noticias, Portugal's leading daily newspaper, in 1987-2004. He has a degree in Business Science and Journalism from the Complutense University.