EMEA IPO: Adyen's €947m IPO

IFR Awards 2018
3 min read
Lucy Raitano

Dutch payments firm Adyen brought some sparkle to EMEA IPOs in 2018, enticing investors with its lean US-style listing, star-studded client base and meteoric growth in a year otherwise dominated by established industrial heavyweights and corporate spin-offs.

At €946.9m, its Euronext Amsterdam listing was the sixth largest IPO by deal size, but the spectacular rise in its share price makes it the best-performing stock to go public in Europe this year. As of November 15, shares were up 114% from IPO pricing, valuing the company at around €15.1bn.

At 140 years younger on average than the other five companies to achieve billion dollar listings in 2018, Adyen stands out from the crop, making do without the reputation and tangible assets that benefited this year’s other praiseworthy IPOs.

Instead, it offered its unique status as an agile tech firm with a glittering client base containing some of the world’s largest tech outfits such as Uber, Netflix and Spotify. Earlier in the year, eBay had even signed up with Adyen in place of its former subsidiary PayPal.

“It almost doesn’t matter if Adyen grows its client base or not – it still grows, say, 35% because their clients do,” said Magnus Andersson, head of cash ECM coverage for EMEA at Morgan Stanley.

Morgan Stanley – occupying a US-style lead-left slot – and JP Morgan were joint global coordinators, and joint bookrunners with ABN AMRO, Bank of America Merrill Lynch and Citigroup.

European investors grabbed the opportunity to play the US tech titans without the single-name risk and in their home market. An avalanche of demand was evident from queues out the door at marketing events that translated into over 500 lines of demand. The IPO was covered in an hour, priced at the top of its range and the shares closed their first day up 90%.

The structure of Adyen’s IPO was as unique as its client list. Bucking Europe’s trend for 25% free-floats, it opted for a typical US tech style listing, offering just 13.4% of the company to investors – a decision that also reflected the difficulty in convincing any shareholders to sell.

The idea was to create a pop on the first day of trading, with the scarcity of shares creating a feverish aftermarket.

Crucially, pricing at 48 times 2018 earnings was far from cheap, especially in the European context, and key US peer Square had delivered a 600% return from IPO to earn its 70 times multiple. Other concept stocks that looked to achieve punchy pricing later in the year found their listing experience turn sour once trading began.

The float also helped turn the tide in Europe when 12 IPOs had cancelled in the previous two months. Too few events put money in investors’ pockets through the year, yet Adyen’s float created enormous value for old and new shareholders. And investors were soon calling on shareholders directly to break the lock-up and sell more.

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