It’s no secret. The Stock Exchange is no longer that prestigious place that companies struggled to access. The valuations offered by public market investors cannot compete with the high sums that the all-powerful venture capital funds are willing to shell out. And companies have thrown themselves headlong into private equity, where they also do not have to be accountable to the market.
A new actor has appeared to try to contain this drought of stock market releases. These are the large wealthy families, who through their large family offices are not only investing decisively for the Stock Exchange but are also claiming to be a key factor to take into account in the processes of going public.
Investment banks are clear that the secret for a stock market debut to come to fruition is that the company that is going to jump on the market has reference investors on the day of its debut. It is what is known in the market as anchor or cornerstone investors. That is, those who, during the roadshow process, commit to buying large blocks of shares and serve as a decoy for other investors. In this role, which has traditionally been played by large investors on the stock market, family offices emerge.
“One thing that we have started to see last year both in Iberia and in other operations in southern Europe is that a growing number of family offices, non-traditional players for this market, are participating more intensively with important orders in this type of process”, explains Salvatore Branca, head of Equity Capital Markets at BNP Paribas in Iberia. “That is a very interesting aspect because institutional demand is clearly affected by valuation issues and appetite for market conditions. Family offices continue to grow significantly in terms of assets under management and have a longer-term perspective”.
In recent years, Europe has seen how some of its wealthiest citizens are not satisfied with spending their vast amounts of money to buy jewelry or yachts. They have chosen to seek investments in real estate, debt, stock market or private equity. One of the largest family offices in Europe is that of the Arnault family, owners of LVMH. In addition to his many investments, he has set his sights on investing in the stock market as an institutional investor.
“What I can say is that there are family offices of significant size that behave in a very similar way to some institutional ones, with many assets under management. These investors have a neutral outlook at the sector level. And then there are family offices that are going to participate in deals closer to their core business. There are investors who do not have clear preferences in terms of sectors. And others who are going to participate because they probably see the IPO process as a channel to establish a relationship with the company”, comments Branca, whose team has just been awarded as bank of the year in ECM in Iberia by the Global Capital Awards.
An example of the latter was offered by Domenico Dolce and Stefano Gabanna, the founders of Dolce&Gabanna. Last year they invested in the IPO of the Italian cosmetics firm Interco. An investment that helped them to get the Italian fashion firm to sign an agreement with them.
In Spain, the main family office is Pontegadea, in the hands of the almighty founder of Inditex, Amancio Ortega. The tycoon has not yet participated in any IPO, but he has been expanding his investment focus. He began betting only on real estate, from there he entered Telxius, the subsidiary of Telefónica’s telephone towers, and later he has taken 5% in REE and has acquired 49% of a Repsol wind farm.
The most active Spanish family in IPOs in Spain has been Ybarra Careaga, through its Onchena vehicle. It has participated in some of the latest operations in the renewable sector, such as Ecoener or Solarpack. They also opted, at the time, for MásMóvil before the takeover bid and are currently present at Atrys Health.
Characteristics of these investors
- Ratings. Salvatore Branca, Head of Equity Capital Markets at BNP Paribas in Iberia, cites two relevant differences between family offices and institutional investors in the context of IPOs. On the one hand, he considers that large wealthy families are “less sensitive to valuation issues” because they have a “longer-term” perspective.
- volatility Another advantage that Branca points to is that family offices are less concerned about market volatility “because they don’t need to generate a return in two or three months, but over a time horizon of two or three years.”
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