The junior market grows up and leads the way for new listings as seafood, biotech, technology and green energy companies attract investor interest during Covid-19.
While M&A has slowed down during Covid-19, the Oslo IPO market has held up surprisingly well. In the first half of 2020, there have been eight new listings across the three markets of the Oslo Stock Exchange, the same number as in the first half of 2019.
The largest IPO by some distance took place in May by Pexip during the height of the Covid-19 lock-down. The market conditions favoured the Norwegian video conferencing company, which successfully completed the largest tech IPO ever at the Oslo Stock Exchange with an initial market cap of NOK 8,662m (EUR ~800m).
There have been only two other IPOs at the main list of the OSE so far this year, both prior Covid-19 and both within the oil & gas sector; BW Energy and Northern Ocean, the latter being a spin-off from Northern Drilling. In addition, we saw transfers to the main list by product tanker owner and operator Hafnia, from Oslo Axess, and onshore salmon farmer Atlantic Sapphire, from Merkur Market.
Strong interest in Merkur Market listings
While the conventional early-stage market Oslo Axess has been quiet with no new listing in 2020, Merkur Market, the "new" junior market established in 2016, has been busy. There have been five new listings at Merkur Market so far this year, four of which came after the outbreak of Covid-19. The green energy tech company Quantafuel listed in February, followed in Q2 by Romsdal Sparebank, Cloudberry Clean Energy and the two salmon farmers Ice Fish Farm and Andfjord Salmon. In comparison, only three companies listed at Merkur Market in 2019.
In particular following the successful Merkur listing of the global learning platform Kahoot! in October 2019, there is a clear sense that this young market is growing up as the platform it was intended to be for issuers entering the capital markets for the first time, and the market is now attracting strong interest from high-quality companies and investors alike. Certain institutional investors are starting to push for Merkur listings during pre-soundings and book-buildings of private placements in unlisted companies, and the low-cost and fast listing process is easy to accept for companies in return for access to capital from long-term quality investors.
Merkur Market offers fast and flexible listing process
Compared to a full listing, the Merkur application process may be completed in one to two weeks, rather than one to two months. Further, the IPO prospectus is replaced by a shorter admission document, and the task of vetting companies is to a large degree placed with the investment bank acting as Merkur Advisor for the listing. Listing requirements, such as free float, are more relaxed, and due diligence may be carried out by the company's own advisers. Compared to the OTC market, the trading system at Merkur Market is more efficient and transparent, and the Oslo Stock Exchange monitors the market and may enforce breaches of disclosure rules and other continuing obligations. In addition, transition to a full listing at the OSE Main list or Oslo Axess is easier.
There will no doubt be more entrants to Merkur Market in the second half of 2020
Seafood, technology and green energy leads the way
There will no doubt be more entrants to Merkur Market in the second half of 2020, and it may be expected that seafood, technology and green energy will continue to lead the way, with companies such as Aker BioMarine, Mercell and Ayfie already having announced their intention to list in July. As institutional investors have embraced Merkur Market for early stage companies, this may over time prove to be at the expense of both Oslo Axess and the OTC market.
Thommessen maintains its position as the leading law firm for IPOs
Thommessen advised in the IPOs of BW Energy and Pexip at the OSE Main list, as well as the transfer of Hafnia from Oslo Axess. We also advised in the private placement and listings of Ice Fish Farm and Andfjord Salmon at Merkur Market, as well as in the landmark listing of Kahoot! in October 2019 and their NOK 852m (EUR ~800m) private placement in June 2020. Thommessen has acted in 50 % of the new listings at the Oslo Stock Exchange in 2020 to date, representing approximately 80 % of the new market cap of the issuers being listed.
IPO League Table | Oslo Axess and Oslo Børs
Source: Mergermarket, 01/01/2008-26/06/2020
- Rank 1 | Thommessen: Value EUR 8237m & 52 deals
- Rank 2 | Schjødt: Value EUR 3935m & 22 deals
- Rank 3 | Wiersholm: Value EUR 3167m & 29 deals
- Rank 4 | Wikborg Rein: Value EUR 2968m & 12 deals
- Rank 5 | BAHR: Value EUR 2728m & 13 deals
On 26 June 2020, the Oslo Stock Exchange announced that Merkur Market will be renamed Euronext Growth and Oslo Axess will be renamed Euronext Expand.