Dispirit us, Amundi
Amundi’s comme-ci-comme-ça flotation embodies the current state of Europe’s new-issues market. The Credit Agricole-owned asset manager’s stock opened up a fraction on Nov. 12, after price-setting expectations had previously been reined in. The 13 external banks working on the deal alongside Credit Agricole and Societe Generale haven’t exactly proven that quantity begets quality.
In general, the listing has delivered what was needed: an exit for Societe Generale. And remaining owner Credit Agricole is spared embarrassment. At one point, shares in Amundi, in which the French lender will retain at least 75 percent, rose as much as 5.9 percent in morning trading. European flotations are generally regarded as well priced if they close between 5 percent and 10 percent higher on day one.
Nor has it been straightforward. This is Euronext’s largest new entrant for 10 years, with a valuation of 7.5 billion euros. SocGen wanted to sell its entire 20 percent stake. Amundi’s heavy skew to fixed income may have scared off some investors, and others may have questioned whether a product-sharing relationship between Societe Generale and Credit Agricole will endure. Other IPOs haven’t made it: music-streaming service Deezer and smartcard maker Oberthur Technologies both pulled Paris listings in recent weeks.
But then, they didn’t have 15 banks behind them. The crowded roster at Amundi is partly about “reciprocity” – the practice of using as many rivals as possible for your own deals in the hope they’ll return the favour later on. But the three with the standout roles are the biggest names in new-share issues: Goldman Sachs, JPMorgan and Morgan Stanley. Balancing a good price with a healthy share performance ought to be their speciality.
Pricing new listings isn’t an exact science. And banks often gripe that working with too many other arrangers can ratchet up the confusion. But with investors finally becoming more discerning after several IPO disappointments over the last two years, the banks who earn fees from underwriting could have done with Amundi’s debut dazzling.