3 C
London
Saturday, February 15, 2025

Paris Stock Exchange Faces 36 Withdrawals in 2024: A Concerning Milestone

Date:

Related stories

British Research Reveals AI-Generated Content Heightens Risk of Bank Failures

Generative AI poses a significant risk to financial security...

CAC40 Nears 8200 Mark Fueled by Strong Earnings Reports

Paris Stock Exchange surged by 1.52% to 8164 points,...

CAF Announces Potential Increase in Activity Bonus Starting February

The activity bonus is a financial aid program for...
- Advertisement -

The Paris Stock Exchange is facing a downturn, with 36 companies exiting in 2024 and only four IPOs, highlighting a troubling trend. Although funds raised during IPOs increased to 700 million euros, investor reluctance remains due to economic uncertainties. Euronext Growth is becoming more attractive for smaller firms, yet public offers have decreased in value. The CAC 40 index also underperformed compared to other major markets, raising concerns about the future of the French stock market.

Declining Trends in the Paris Stock Exchange

The Paris Stock Exchange is experiencing a significant decline, with a concerning trend emerging as 2024 witnessed the exit of 36 companies, while only four new initial public offerings (IPOs) occurred, according to a study conducted by EY. This record low figure underscores a persistent downward trajectory that has been evident in recent years. Despite the amounts raised during these IPOs being higher than in 2023, the allure of the Parisian market continues to diminish.

2024: A Year of Withdrawal and Caution

The year 2024 has seen an alarming increase in withdrawals from the Paris Stock Exchange. A total of 36 companies departed through various means, including withdrawal offers, voluntary delistings, or judicial liquidations. This marks a substantial rise from the 23 withdrawals documented in 2023, illustrating a 50% increase.

On the flip side, only four companies opted for public listings in 2024, a historically low number. Among these new entrants are:

  • Planisware, a project management software publisher that went public in April on Euronext;
  • Exosens, a defense firm that debuted in June;
  • Lighton, a generative AI specialist, and Odyssée Technologies, both listing on Euronext Growth towards the end of the year.

This trend of declining IPOs has persisted since 2022, when only 11 IPOs were recorded, in stark contrast to 33 in 2021. The Paris market faces a daunting challenge in attracting new companies to its platform.

While the amounts raised during IPOs in 2024 reached 700 million euros—680.1 million euros on Euronext and 19.9 million euros on Euronext Growth—the overall climate remains cautious. This uptick in raised funds overshadows the mere 62 million euros gathered in the previous year. Nevertheless, investor hesitance persists, largely due to an unpredictable economic and geopolitical landscape, coupled with rising interest rates.

The scenario could have been markedly different if Renault and Sanofi had proceeded with their planned IPOs for Ampere and Opella, which were anticipated to inject new energy into the Paris market.

Euronext Growth: A Preferred Path for Companies

The appeal of Euronext Growth, known for its lighter regulatory demands, gained traction in 2024. Three companies transitioned their listings from Euronext to Euronext Growth, while Vaziva, focused on employee benefits, shifted from Euronext Access to Euronext Growth. This movement reflects a growing preference among small and medium-sized enterprises for a more adaptable market, as stringent regulations on major exchanges deter potential IPOs.

Despite the downturn in IPOs, public offers surged to 36 approved by the AMF in 2024, a 50% increase from 23 in 2023. However, the cumulative value of these public offers plummeted to 1.5 billion euros, a stark decline from 9.5 billion euros in 2023. The dramatic decrease can be attributed to the absence of large transactions, such as the state’s purchase of EDF shares for 6.5 billion euros in 2023, and a shift toward smaller deals, with an average transaction size of 46 million euros compared to 114 million euros in the previous year.

The most notable operations in 2024 included the takeover bid for SII, a digital services provider, valued at 295 million euros, and the bid for Believe, a music distribution company, at 294 million euros.

In comparison to its European and American counterparts, the Paris Stock Exchange shows a distinct lack of momentum. The CAC 40 index fell by 2.15% in 2024, while the German DAX surged by 18.85% and the S&P 500 also closed the year in positive territory. This disparity can be partly attributed to the economic uncertainties in France, which have adversely affected companies’ IPO intentions.

Additionally, investors participating in public offers in 2024 received lower compensation than those in 2023. The median premium offered to shareholders dropped to 22.8%, down from 42.9% the previous year. Conversely, the median premium relative to the intrinsic value of targeted companies rose to 15.9% from 9.1% in 2023, signaling a shift in the offer dynamics.

The technology sector led public offers, comprising 39% of transactions, while the industrial sector trailed with only 17%. Moreover, 61% of public offers resulted in delistings, involving companies such as SII, Believe, and others. The trend of liquidations is also concerning, with eight companies undergoing this process.

In summary, the Paris Stock Exchange is navigating through a challenging phase characterized by a historic decline in IPOs, increased delistings, and reduced funding amounts. Although Euronext Growth continues to attract certain firms, the Paris market struggles to hold its ground against international competitors. Without a revival of investor confidence and enhanced attractiveness for businesses, the negative trend may persist into 2025, raising significant concerns about the future of the French stock market.

Latest stories