European companies confront IPO risks as Renk cancels float

investing.com:

By Emma-Victoria Farr and Pablo Mayo Cerqueiro

FRANKFURT/LONDON (Reuters) — Buoyed by positive investor feedback and growing optimism around new stocks, German gearbox supplier Renk was on track to make its Frankfurt market debut in early October.

That was until this week, when the company decided to pull its listing in the final hours of Wednesday, blaming market conditions.

In the coming weeks, a string of European companies are slated to come to market.Among them is CVC Capital Partners, which is still planning a November listing depending on market conditions, a person with knowledge of the matter told Reuters.

It is planning to raise around 1 billion euros ($1.05 billion) from the share sale, the person added. The company did not respond to a request for comment.

However, the fate of Renk highlights the challenges facing new issuers, exacerbated by a recent bout of volatility in equity and debt markets. Some recent large IPOs in the U.S. have had a mixed performance after an initial rally.

«It's turbulent waters right now, so anything that's not really well anchored by long-only investors is going to struggle,» said Andreas Bernstorff, head of Equity Capital Markets for Europe, the Middle East and Africa (EMEA) at BNP Paribas (OTC:BNPQY).

Renk in a statement on Wednesday evening cited a «clouded» market environment for its decision to pull its planned listing, which would have given it a potential valuation of up to 1.8 billion euros.

In recent days Renk's corporate peers including Hensoldt and Rheinmetall had been trading down and Germany's DAX fell almost 2% in the run-up to its planned listing.

To be sure, some bankers were sceptical about whether Renk would draw a large following, given investors' preference