Pfisterer's Successful Stock Market Debut: A Tough Call for US Listings?
Pisterer excels in his inaugural performance on the stage floor.
In the wake of volatile stock markets, large companies have been hesitant to venture into IPOs. But the story is different for electrical engineering specialist Pfisterer, the first major IPO of the year. The shares made a splashing debut on the Frankfurt Stock Exchange, opening at 30 euros – 11% above the issue price – and reaching as high as 31.25 euros.
CEO Johannes Linden stated, "We're bloody thrilled with Pfisterer's stock market debut!" The family-owned firm, valued at 489 million euros on issuance, will pocket 95 million euros of the 188 million euros raised. Linden pointed out that the IPO funds would strengthen their pursuit of growth and capitalize on global megatrends such as renewable energies and decarbonization.
For Pfisterer, a Swabian manufacturer of electrical engineering products, listing in the “Scale” free trading segment was still voluntary compliance with the stricter rules of the Prime Standard. Despite their Winterbach location near Stuttgart, the company produced products for connecting and insulating electrical conductors at power network interfaces with 1,200 employees and reported sales of 383.1 million euros in 2023, a 15% growth from the previous year. Adjusted operating results (EBITDA) also increased by 24% to 64.4 million euros.
Despite a successful debut, Pfisterer is the only major IPO in Germany this year, with companies such as pharmaceutical company Stada and Oldenburgische Landesbank staying away due to volatile stock markets. However, European stock exchanges are exploring ways to attract companies and compete with the US for IPOs – a compelling choice for companies weighing the advantages of a domestic versus US listing.
Let's delve a bit deeper into the pros and cons of each listing option:
Domestic Listing vs. US Listing:
- Market Access and Visibility:
- Eligibility for Benchmark Indices: Listing on Deutsche Börse allows companies to be included in major European indices, boosting their visibility and attractiveness to investors[2].
- Strong European Investor Base: Deutsche Börse offers access to a robust investor base within Europe[2].
- Regulatory Environment:
- Favorable European Regulatory Framework: Companies can benefit from the regulatory environment of the European Union, compared to the stricter regulations in the US[2].
- Financial Benefits:
- Cost Efficiency: Listing on Deutsche Börse might offer more cost savings due to less extensive financial reporting and compliance[2].
- Lower Compliance Costs: Companies avoid additional costs associated with complying with US GAAP (Generally Accepted Accounting Principles) and the Sarbanes-Oxley Act[2].
- Strategic Opportunities:
- Integration with European Markets: A listing on Deutsche Börse facilitates integration with other European markets and enhances strategic partnerships across the region[2].
On the flip side, a US listing might result in higher costs, increased reporting requirements, and broader market competition. Each company must evaluate these factors based on their specific business goals and market ambitions.
Meanwhile, Europe's major stock exchange operators are trying to counter the slump and compete with the USA for IPOs, and the Deutsche Börse is promoting the advantages of a domestic listing in a recent document distributed to German companies and IPO advisors, emphasizing weaker stock performance, higher costs, and litigation risks associated with US listings[3]. In contrast, EU companies with a US listing have shown a tendency for weaker performance than the overall IPO cohort on their first trading day and thereafter[3].
Source: ntv.de, jki/rts
- IPOs
- Deutsche Börse
- Stock trading
[2] Advantages and disadvantages of a domestic versus US listing: Deutsche Börse's document distributed to German companies and IPO advisors.[3] EU companies with a US listing have shown weaker performance than the overall IPO cohort.
The community policy of Deutsche Börse includes vital considerations for companies weighing the advantages of a domestic versus US listing. Under the stricter rules of Deutsche Börse's Prime Standard, vocational training programs could be beneficial for companies to attract skilled workers and maintain a competitive edge in the electrical engineering sector.
In the pursuit of growth and capitalization on global megatrends such as renewable energies and decarbonization, the funds received from Pfisterer's IPO could potentially be allocated towards investing in vocational training programs, which might help foster a more skilled workforce and contribute to the company's long-term success.
