The day before Adyen’s stock market listing this week, the Dutch financial technology group’s co-founder sent a message to employees: “We won’t be ringing the bell — or sounding the gong — tomorrow,” Pieter van der Does wrote. “While it’s definitely important to celebrate successes, investor liquidity is not something we celebrate.”

He failed to stop the party, though. Adyen shares soared more than 90 per cent on their debut on Wednesday. Having achieved a market value of almost €14bn, the payments group boasts a multiple that would be the envy of most Silicon Valley stars: more than 12 times revenues and 170 times earnings.

It is the latest sign of ebullience among European-based tech companies, which have been long overshadowed by US juggernauts. A month before Adyen came Avast, a Czech cyber security company, listed in one of the five largest tech flotations on the London Stock Exchange. That came two days after Swedish payments company iZettle’s abortive plans for what would have been Europe’s biggest fintech IPO.

The announcements — which follow Swedish music streaming group Spotify’s much-anticipated New York listing in April — are being taken as a sign that Europe’s tech sector has matured, with better access to late-stage capital and the infrastructure to go public.

Still to come are flotations from online luxury fashion marketplace Farfetch and Funding Circle, the peer-to-peer lender, according to several people familiar with the companies’ plans. Data from Dealogic show the number of IPOs of European-headquartered tech companies outpaced those from the US in each of the past four years, and surged 34 per cent last year to 59.

But just before iZettle was due to list in Stockholm, US payments giant PayPal swooped in and snapped it up at double the IPO price. The start-up’s owners, like so many others from Europe, traded in a public listing for a bigger cheque and a future under the auspices of a Silicon Valley owner. 

For Europe-focused investors and politicians eager to build the next Google, Apple or Tencent, iZettle’s sale reignited concerns over the ability of the continent’s private tech companies to grow big and develop sustainable business models independently. Over the past decade a succession of trailblazing European tech companies have been bought by US peers, including Skype and Mojang (Microsoft), DeepMind (Google) and Shazam (Apple). 

“Selling to a strategic partner you get a much higher price,” said Shing Lo at law firm at Bird & Bird, who advises technology companies on deals and flotations. “Start-ups are starting to think about listing . . . but more of them are actually doing trade sales.”

However, the near doubling of Adyen’s shares on its trading debut pointed to huge untapped appetite for technology companies in Europe’s public markets. European investors have found it hard to get large stock allocations in US-listed IPOs, leaving them on the sidelines of a hot market, said Lise Buyer, an IPO adviser who worked on Google’s 2004 stock market listing. She said that had created pent-up demand that probably added to the spike in Adyen’s share price.

Neil Rimer, co-founder of Index Ventures, an early backer of iZettle, Adyen, Farfetch and Funding Circle, pointed to “a coincidence of a big market need and technological platforms and tools like [the cloud] that enable you to serve that need in a way that is very compelling and scaleable”.

The increase in IPOs from European companies comes against a backdrop of the most active tech IPO market in the US since the dotcom boom that peaked at the turn of the century. Twenty tech companies have gone public in the US this year, including cloud storage company Dropbox.

Farfetch plans to list in New York with a targeted valuation of up to $5bn this year, while Funding Circle will float in London with a valuation of up to £2bn, according to people familiar with the two companies’ plans. The run of listings by venture-backed European companies will bring a windfall for investors such as Index Ventures and General Atlantic, and should boost confidence that early-stage funds can find easy exit opportunities. 

Despite the strong recovery in appetite for buying into IPOs — typically among the most volatile stock market investments — investors have been far more cautious than they were during the dotcom boom. The IPO wave on Wall Street has been led by “software as a service” companies, which charge monthly subscriptions for access to their technology, making their financial performance highly predictable. Adyen, which strikes multiyear contracts with merchants, also receives recurring revenues.

Institutional investors caution that listings do not always translate into success on the public markets, especially if flotations are used by venture capital investors to offload companies beyond the typical seven-year timescale for an investment. Rovio, the Finnish mobile gamily company, has lost almost half its value since it listed in Helsinki last year.

“We are scrutinising the IPOs to try to establish positions in the companies that we might, on a longer-term basis, build a position [in] at a reasonable valuation,” said Walter Price, fund manager of the Allianz Technology Trust. “The issue with the IPO market is that there is a large part of the initial demand for these stocks from people that are just trying to flip the stock, often causing the valuation to get extended on the initial offering.”

Additional reporting by Chloe Cornish and Nicole Bullock

From broken bikes to big bucks

Pieter van der Does: ‘We’re not interested in exits’ © Bloomberg

Adyen’s co-founder Pieter van der Does began his entrepreneurial career fixing up broken motorbikes in a suburb of Amsterdam and selling them for profit: “I liked technology and always liked like restoring cars and mopeds,” he told the FT in February. “It was always more about building something.”

Speaking to the FT in May, Mr Does said most European start-ups were too short-term and focused on exits or valuations rather than building a company. “We’re not so interested in exits,” he said at the time. “Often the first time you [build a company] the exit is the path to success — but the second time and the exit is not so much a theme you consider.”

The Dutch entrepreneur’s first time was more than a decade ago, when he cut his teeth as an early employee at payments start-up Bibit, which was rolled into Vantiv’s Worldpay, then owned by the Royal Bank of Scotland.

In Surinamese, “Adyen” means “all over again”, but this time Mr Does said he was not focused on an exit. People familiar with the company said he convinced bookrunners to pitch a lower price in the IPO: “A lot of valuation is just based on how you are counting,” he said in May.

On Wednesday, however, investor interest propelled Adyen’s valuation into uncharted territory. The start-up’s share price almost doubled on the day to give the company a market value of more than €13bn — bigger than that of established financial institutions such as Commerzbank and Mediobanca.



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