Primafrio has decided to postpone the public offer of sale without a date to place 25% of the capital, with the intention of reaching a market capitalization of between 1,300 and 1,700 million euros. The company was due to go public on Thursday in an operation in which shareholders planned to pocket between 325 and 423 million.
The Murcian company, which announced the IPO on June 10, has thrown in the towel waiting for “market conditions to improve,” as explained in a statement. The overvaluation of the company and the poor prospects for road transport have been able to weigh on this last-minute suspension due to the lack of interest from investors.
It thus joins a long list of firms that in recent years have aborted in extremis their plans to go public due to the instability of the markets. Before the refrigerated transport company for fruit and vegetables, there were the frustrated premieres of Opdenergy, Capital Energy, Balboa Ventures, Tendam, Haya Real Estate, VIPS, Cepsa, Via Celere or WiZink.
The most notorious failure was that of Cepsa, which in October 2018 decided to reverse its intention to place 25% of the capital, in the hands of the sovereign wealth fund of Abu Dhabi Mubadala, for a total company value of more than 8,000 millions.
More recently, the Navarran renewable energy company Opdenergy was erased from its stock market premiere, which was scheduled for May 7 with a capitalization of between 826 and 926 million. Also in the same sector, the wind and solar energy company Capital Energy resigned from its IPO last April precisely due to the excess supply of this type of companies linked to the boom of renewables. A circumstance that Acciona Energía will have to save, which plans to debut on the Stock Exchange on July 1 with a valuation of between 8,800 and 9,800 million euros, after having placed 28.75% of capital.
On the other hand, Línea Directa was successfully launched in the markets, which rose 23% on the first trading day on April 29; and Soltec, the solar energy company, which went public at the end of October 2020 valued at 440 million, and today has almost tripled its value.
An IPO is a long process, usually lasting no less than six months, involving a battalion of legal advisers and investment banks. Throughout this period, market circumstances can change radically and the company’s initial valuation may be diminished and not fulfill the aspirations of the owners. At this time, the equity markets, after a notable rise from the lows of March 2020, are in a phase of certain nervousness that works against the interests of those aspiring to put their company on the floor. The latest inflation data, especially in the US, could lead central banks to accelerate their roadmap for the withdrawal of monetary stimulus, which would be a major setback for stocks.
In the string of frustrated IPOs in recent years, we must also take into account the emergence of a very tough competitor: venture capital. The funds of private equity all over the world they swim in liquidity, a consequence of ultra-low interest rates and the arrival of investors traditionally unrelated to this type of asset due to its high profitability. With their pockets full, venture capital managers have sidetracked the initial plans of many companies that were on the horizon to go public. The development of an IPO takes time, the valuation depends on the change of mood of the markets, and the expenses are usually high. However, the sale of the company, or part of it, to a fund depends on a bilateral negotiation and, due to its purchasing power, usually offers better valuations for the owners.