Investors and companies are holding back in uncertain times. But financial leaders expect that the dry season will soon be over.
FEWER GO HERE: The companies stood in line a couple of years ago, but now they have made a U-turn. Photo: Emilie Holtet / NTBPublished: Published:
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Only seven companies were listed on the Oslo Stock Exchange in 2023, a number that stands in stark contrast to the euphoria of a few years ago.
In 2020 and 2021, the Norwegian stock market was red-hot. Many companies went public, interest rates were low and the willingness to take risks was sky high among investors.
Now it has turned around.
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Alexander Opstad is head of DNB Markets, Norway’s largest brokerage house. He points out that interest rates have risen and believes that investors are more uncertain.
– A good number of IPOs have developed very poorly. The skepticism has become clear among the investors who participate in IPOs, says Opstad.
Several companies that were listed during the stock market boom have fallen sharply in value, including in the renewables sector.
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Opstad believes that the historically strong years must take part of the blame for the drop in listings in 2023.
– We simply got rid of many of the candidates who had stock exchange plans, says the broker manager.
An important part of the brokerage houses’ business is to help companies go public. These assignments are often lucrative and an important source of income for them.
Opstad points out that the number of IPOs goes in cycles.
– There tend to be periods with few and many IPOs. In that sense, it is completely normal.
There are now 338 companies listed on the trading floors of Oslo Børs, a historically high number.
The world’s stock market has largely done well this year, but the stock market rise has been centered around a small number of stocks, particularly in the technology sector, according to Opstad.
– The valuations have not been so attractive in some sectors. Companies considering going public choose to postpone the listing.
Alexander Opstad, head of DNB Markets Photo: Cicilie S. Andersen, E24
– The uncertainty has been decisive
One company that has had plans to go public is Jordanes, which owns a number of well-known brands, such as Sørlandschips, Synnøve Finden and Peppes Pizza. The company announced in November that it was postponing the IPO indefinitely and pointed to market conditions.
Stock exchange director Øivind Amundsen says that the companies are sitting on the fence.
– Many companies want to go public, but have put the brakes on. We thought things would get better this autumn, but then uncertainty increased with the war in Gaza, says Amundsen.
– The stock market has risen almost 10 per cent this year. Why won’t companies join the boom?
– It has been a fairly good stock market year, but there have also been fluctuations. Many are worried that unforeseen things will happen so that it will be a negative journey.
Stock exchange director Øivind Amundsen Photo: Beate Oma Dahle / NTB
Amundsen points out that large IPOs, for example in the US, have done poorly.
– Several companies have fallen in the first period after listing. It is spreading around the world. Then you wait, if it is not absolutely necessary. The uncertainty has been decisive for the companies choosing to wait with a listing.
The weak IPO year in Norway is part of a wider picture. according to Financial Times is the value of the transactions that have been made globally this year at the lowest level since 2013.
Looking for signs of interest
However, there will be more IPOs in 2024, believe broker manager Opstad and stock exchange director Amundsen.
Stefan Schander Slemdal is also waiting. As head of equity transactions at Carnegie, he is close to Norwegian IPOs.
– We do not think the level of activity will return to 2020 and 2021, but expect an increase from the last couple of years back to more normalized levels. This assumes that expectations of lower interest rates materialize, while at the same time avoiding recession in the most important economies globally.
One thing that makes Slemdal more positive for the time ahead is that he is again starting to see more interest among investors in small and medium-sized companies. In a Norwegian context, typically companies up to NOK 10 billion in market value.
Stefan Slemdal, head of the equity department at Carnegie. Photo: Carnegie
For there to be a lot of activity among new listings, there must be interest in investing in this size segment, according to Slemdal. This is where most of the Norwegian transaction flow is found, he emphasizes.
According to Slemdal, investors have for a couple of years chosen to focus on larger and more stable companies, such as the so-called “stock exchange locomotives”.
– We are now beginning to see signs that additional returns are again expected investment returns beyond what is normal in a market for investments in SMBSMBssmall and medium-sized companies, says Slemdal.
– Now we see that capital is once again flowing to Nordic mutual funds with a focus on such companies. Historically, this has been an important driver for listing activity, says Slemdal.
He also points out that several of the most recent IPOs have provided good returns for investors.
Among the year’s major IPOs are the engineering company Norconsult and the offshore shipping company Dof, which made a stock market comeback after going bankrupt. Both shares have risen in price after listing. DNB Markets and Carnegie were among the facilitators.
– Those investors who have dared to take the chance have had a very good journey. We believe this will increase the appetite for further IPOs in 2024, says Slemdal.
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