Actionable Ideas for Companies and Sponsors
European Capital Markets Are Receptive to Companies Looking to Raise Start-up Capital
European issuers can take advantage of investor appetite to support newly created companies that invest in a specific business or asset class. There is an unprecedented opportunity to invest in sectors experiencing significant structural growth, which are uncorrelated with the broader economic cycle. Jefferies recently completed the $1.1 billion IPO of Conduit Holdings, a newly established reinsurance company, on the London Stock Exchange. Against an industry backdrop of losses, litigation and capacity constraints, as a new business Conduit had no legacy exposure and offered investors the opportunity to invest in an uncorrelated asset at book value.
UK closed-end investment funds have also been historically used to raise capital through an IPO with a portfolio of seed assets or an identified pipeline to invest in various asset classes including global healthcare, energy storage or energy efficiency. While there are different structures available to issuers, a good start-up candidate must have several characteristics: (i) a management team with a successful track record of achieving attractive returns; (ii) a focus on sectors with underlying secular growth characteristics; and (iii) access to investment opportunities.