Trends paving the way for tech-IPO upswing

2020 has changed the perception of many things that we previously accepted as truisms – one of them being that IPO roadshows must be conducted in a physical manner, with analysts and management travelling across the world to meet investors. This illusion was shattered when ABG Sundal Collier (ABGSC) held its first fully digital IPO with Pexip this summer.
“Since Pexip, all of our 7 TMT IPOs have been digital, and we believe that the new format is appreciated by virtually all stakeholders in the process”, says Aksel Engebakken, an analyst at ABGSC in Oslo.
The digital IPO format is also a crucial part of the answer to another question: why have we suddenly seen so many tech-IPOs in Norway. According to Eirik Thune Øritsland at ABGSC, one reason is that working remotely has enabled an entirely different level of agility and speed during the listing process. The statistics are clear: the recent Link Mobility IPO saw the ABGSC Tech team meet 426 investors in less than two weeks. This is ~4x over the numbers we were seeing prior to COVID-19. In other words, working digitally has enabled investors, analysts and companies to accomplish much more over a shorter time span.
But why have there been so many new listings within tech?
 “Tech companies can be defined in many ways, but they often have the characteristic of offering either a digital product or a digital distribution, if not both. Digitalisation is a mega trend, but the benefits have become even more evident during a pandemic in which many non-tech companies faced physical barriers to efficient operations. In other words, there have been a lot of tech IPOs because COVID-19 has helped demonstrate how valuable technological products and value chains are”, says Øystein Elton Lodgaard at ABGSC.
Another factor contributing to the high level of tech-IPO activities is that Merkur Market,  has proved itself as an attractive listing venue for companies, offering a more agile exchange with less stringent criteria. For fast-growing, dynamic tech companies this has proved to be a desirable value proposition.
Taking a step back, the tech sector has historically constituted a small share of the Norwegian exchange, but we have now seen a trend shift towards more tech-company listings. “We think, however, that we have only just scratched the surface: The structural positive trend within tech is not going anywhere, and Norway has many traits that should help it to foster new large and successful tech companies”, says Aksel Engebakken, adding that: “Merkur’s positive reception leads us to believe that Norway may be able to attract foreign tech companies in future. Were that to happen, we would truly be able to talk about a tech hub in the making”.