Galderma debut gives hope for a good stock market year
Published: Friday, Mar 22nd 2024, 14:10
Updated At: Saturday, Mar 23rd 2024, 01:00
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On Friday, the Swiss stock exchange celebrated the largest IPO since 2017 with Galderma. This gives hope for a good year for further new entries.
Galderma got off to a flying start on the Swiss stock exchange on Friday. Investors paid 61 francs for the skin care specialist's shares right at the start, around 15 percent more than the issue price of 53 francs. The company was thus valued at around 14.5 billion Swiss francs at the start of trading. The shares rose even further during the course of the day, closing at 64 francs.
It is the largest IPO in Switzerland since 2017, when the measurement technology group Landis & Gyr went public, and one of the largest in Europe for more than two years, as the stock exchange operator SIX announced on Friday. This could lay the foundation for further successful IPOs this year.
Interest rate cut as an opportunity for the stock market
Since the beginning of 2022, difficult market conditions and geopolitical tensions have led to a decline in global IPO activity, writes SIX. However, after a long period of uncertainty, the macroeconomic situation is beginning to normalize. This is confirmed by the recent decline in interest rates and the inflation rate.
In fact, Galderma did not choose a bad date for its IPO - the day after the SNB cut interest rates. After all, when interest rates fall, share prices rise - which was confirmed on Thursday after the SNB's decision.
Although the stock market is treading water on (today's) Friday, observers assume that the reduction in the key interest rate will weaken the Swiss franc and thus strengthen growth in export-oriented industry - which in turn speaks in favor of rising stock market prices.
Different starts
According to SIX, a recovery can also be observed on the global equity markets. "We are confident that this increasingly positive market environment will help usher in a number of new and interesting IPOs in Switzerland and beyond," says Bjørn Sibbern, Global Head Exchanges at SIX.
However, the results of the major global IPOs in recent days have been mixed: While the online platform Reddit raised around 750 million dollars when it went public on the US stock exchange on Thursday and achieved a premium of almost 50 percent on the issue price, the IPO of the perfume chain Douglas in Germany was a flop. At the close of trading, the shares cost around 11 percent less than the issue price.
It is currently unclear when the next IPO will take place in Switzerland. Another "classic" IPO like that of Galderma is currently not in sight.
Still few IPOs on the agenda
Holcim has stock market plans for its US business. However, the shares of its North American activities are also to be listed in the USA. And the Swiss agrochemicals group Syngenta, which is owned by China, is to be spun off and listed on the Shanghai stock exchange.
The TX Group has also announced another IPO through a spin-off, which is to take place in Germany. It intends to float its advertising marketing subsidiary SMG Group on the stock exchange. However, this IPO is likely to be significantly smaller than that of Galderma.
Botox and skin care
The former Nestlé division Galderma announced its IPO on the SIX just over three weeks ago. A total of around 37.2 million new shares and around 0.28 million existing shares were placed. In addition, there is a possible over-allotment option of around 5.6 million shares.
The company intends to use the proceeds from the sale of the newly issued registered shares primarily to strengthen its balance sheet by repaying and refinancing debt. Galderma will be included in the Swiss Performance Index (SPI) and its sub-indices on the second trading day, i.e. next Monday.
In addition to sun creams such as "Daylong", the Group also sells medication for skin diseases such as acne, psoriasis and rosacea. The company's portfolio also includes products against skin cancer. Galderma also offers various Botox brands.
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