Shares in Polish e-commerce group Allegro leapt more than 50% on their trading debut on Monday, giving the company a market value of about $17.6 billion in Europe’s biggest IPO so far this year.
Allegro’s strong start mirrored the performance of some recent U.S. IPOs that have shot up on their first days of trading, demonstrating investors’ willingness to pay for growth.
Allegro, founded more than 20 years ago as a home-grown rival to eBay, is central Europe’s most recognised e-commerce brand, with its website attracting 20 million visitors a month.
At 1126 GMT, its shares were trading at 68.1 zlotys, up 58.4% from their IPO price of 43 zlotys, which was itself at the upper end of the guidance range.
“When pricing deals like Allegro, it is more important to build momentum than to maximize price on day one,” said Christoph Stanger, who co-heads Goldman Sachs’ European equity capital markets business, which helped organise the IPO.
Private equity owners Cinven, Permira and Mid Europa will want to benefit from that momentum in follow-on placements, after only 25% of the Polish company was floated in the IPO, Stanger said.
Europe’s IPO market is showing some signs of picking up, with Britain’s The Hut Group last month making the biggest debut on the London Stock Exchange in seven years.
However, investor appetite seems to be reserved for tech and growth companies - sectors that corporate Europe is light on compared to the United States, where a number of blockbuster tech IPOs have priced this year.
Allegro operates in one of few business areas to benefit during the coronavirus pandemic, as shoppers switch to buying online.
“The recent pandemic highlighted the value of e-commerce for a consumer, and accelerated e-commerce penetration,” said Ivan Kim, an analyst at Xtellus Capital. “Allegro is a well-established marketplace ... and is already quite profitable.”
It immediately became the most valued company on the Warsaw bourse and Poland hopes the initial public offering will boost the exchange which has struggled to attract new listings and seen a drop in turnover.
“In these difficult times when we fight with the pandemic and recession, we all need good news. Allegro’s debut is good news for all of us,” Deputy Prime Minister Jaroslaw Gowin told a news conference.
Among other Polish mobile games firm Huuuge has announced plans for a stock market listing.
Across Europe there are numerous IPO deals already in the pipeline for the first half of 2021, as the 2020 season is drawing to a close and issuers seek to avoid potential market turmoil in connection with the U.S. presidential elections on Nov. 3, capital markets bankers have said.
Allegro’s IPO comprised more than 23.25 million new shares and 190.29 million existing ones. Previously, the largest company on the Warsaw exchange was video games producer CD Projekt.
Goldman Sachs, Morgan Stanley, Barclays, Bank of America, Citigroup, Santander and BM PKO BP organised the Allegro flotation.
Reporting by Anna Banacka in Gdansk, Alan Charlish and Anna Koper in Warsaw, Abhinav Ramnarayan in London and Arno Schuetze in Frankfurt; Editing by Edmund Blair, Mark Potter and Susan Fenton