By Eric Onstad and Abhinav Ramnarayan
LONDON -Commodities broker Marex Spectron has pulled a planned initial public offering (IPO) in London due to difficult market conditions, the company said, the second European company to cancel such plans in the past week.
Marex was considering a flotation in London that a source estimated could value the company at 500 million pounds ($706 million).
But a message went out to investors on Tuesday night that the deal would not be going ahead, the company confirmed on Wednesday.
“Despite broad investor interest from high quality institutions in the Marex business and prospects, we have decided not to proceed with the IPO at this time due to more challenging IPO market conditions,” the company told investors.
French car parts distributor Parts Holding Europe (PHE) last week pulled its Paris initial public offering, citing unfavourable market conditions, the latest sign of waning investor interest in stock market listings.
“There’s a lot of competition for funds available, it’s pretty hard to raise what you’re looking for,” said a source familiar with the situation.
A number of companies are marketing stock market listings across Europe, including sizeable listings from Acciona’s renewable unit in Spain, Nordgold in London, Aramis and Believe in Paris, About You in Frankfurt and Islandsbanki in Iceland.
Bankers have told Reuters that investors are increasingly choosing to focus on the bigger and more marquee names and excluding mid-cap companies from their plans.
Marex’s IPO launch came after a strong run for commodities this year as economic growth recovered, investors looked for a hedge against rising inflation and metals demand was expected to climb from a green revolution.
Investment flows into commodity funds hit a record high in the first four months of the year, according to Lipper.
“The company is doing extremely well and there’s also what some people are calling a commodities supercycle. So another run at the market could be on the table at some point,” the source added.
($1 = 0.7082 pounds)