Half of all European IPOs conducted in the Nordics

Despite COVID-19 and political uncertainties during the year, the market for initial public offerings (IPOs) has been booming in the Nordics, where half of all European transactions have been conducted year to date.
 
Jonas Ström, CEO of the independent Nordic investment bank ABG Sundal Collier (ABGSC), believes that the unique financial eco-system in the Nordics has laid the foundation for the record strong IPO trend. He identifies several key factors such as political stability and a high level of transparency, but also a long history of equity investments.
 
“I can’t see any other market outside the Nordics with so many institutional investors, relative to the size of our economy. We also have a long tradition of retail investors investing in these stock markets. Combined, this creates opportunities to do more IPOs of relatively smaller-sized companies. This is more difficult outside the Nordics”, he explains.
 
Another factor to take into consideration is the Nordic phenomenon of cornerstone investors, according to Jonas Ström. Cornerstone investors are a group of investors who commit in advance to invest a fixed amount of money, or for a fixed number of shares, in an IPO.
 
“This is quite unique for the Nordic market and has increased the possibility to conduct successful IPOs despite market volatility”, says Jonas Ström.
 
“This phenomenon also attracts foreign capital to the Nordics and this year we’ve seen an increased number of international investors acting as cornerstone investors in Nordic IPO’s. Look at Luxor participating in the Link Mobility IPO or Lazard investing in Karnov, just to mention two examples.”
 
But to really understand why the upswing of IPOs in the Nordics, relative to the rest of Europe, happened in 2020, Jonas Ström believes that we need to look at more current events.
 
“COVID-19 really made the digitalization trend take a 3-5 year leap in just a few months. The pandemic has led to a lot of suffering for society and the economy but it also contributed to speeding up an inevitable industrial shift where Nordic companies have been far better positioned to take advantage of changed customer behaviors.”
 
The pandemic has also changed how ABGSC and other investment banks can conduct IPOs.
 
“When we did the Pexip IPO, we invented the fully digital IPO roadshow. It had never been done before and now it’s the new normal. With digital roadshows we have increased our efficiency and we have the capacity to do more IPO’s then ever before.”
 
During 2020, several IPOs that ABGSC participated in were conducted on the Norwegian growth market platform Merkur Market, or Euronext Growth as it will be called going forward, where the listing procedures are somewhat less complicated.
 
“Merkur has developed into an excellent platform for growth companies to access capital in the Nordics. In recent years, we have also seen several larger companies like Kahoot choosing Merkur when going public”, Jonas Ström explains.
Percentage of Nordic IPO’s in relation to European IPO’s