Deutsche Boerse and Euronext, two of Europe’s largest stock exchange operators, are intensifying their efforts to retain local initial public offerings (IPOs) as a growing number of European companies consider moving their listings to the United States.
This renewed push comes amid a marked decline in IPO activity across European and UK markets over the past two years, with many firms drawn to the deeper capital pools and perceived higher valuations of U.S. exchanges.
The operators are actively challenging the widespread belief that a New York listing guarantees superior valuations and long-term performance. Deutsche Boerse, which manages the Frankfurt Stock Exchange, recently circulated a document to German companies and IPO advisors highlighting the risks of U.S. listings, including sluggish post-IPO performance, higher costs, and increased litigation threats.
Their analysis shows that about two-thirds of companies listing in Europe, including Germany, saw gains on their first trading day, compared to only half of European firms listing in the U.S. Over the long term, European IPOs have also tended to perform better in their home markets.
Euronext, which oversees seven exchanges including Amsterdam and Paris, is preparing to release similar research. Both exchanges are keen to dispel the notion that U.S.-listed companies consistently achieve higher valuations. This mirrors efforts by the London Stock Exchange, which has also published reports challenging the perception of U.S. market superiority.
The urgency is underscored by data from the past decade: approximately 130 European companies, valued at a combined $667 billion, have shifted their listings to the U.S. However, 70% of these firms are now trading below their initial listing prices, with an average decline of 9%. Deutsche Boerse’s findings further reveal that U.S.-listed German companies have seen an average 13% decline since 2004, while those that remained in Frankfurt posted an average gain of 24%.
European officials are also exploring regulatory reforms to deepen the continent’s capital markets and make local listings more attractive. With the U.S. S&P 500’s market capitalization nearly four times that of Europe’s Stoxx 600, the scale and liquidity of American markets remain a powerful draw for ambitious firms.
Despite these challenges, Deutsche Boerse and Euronext are determined to reverse the IPO flight by highlighting the benefits of local listings, including better post-IPO performance, lower costs, and reduced legal risks. Their campaign marks a critical effort to strengthen Europe’s financial ecosystem and retain its most promising companies.
