Stock market, 2023 performance and 2024 outlook

In 2023, 33 companies they were listed on the market Euronext growth Milan (dedicated to SMEs), +6 compared to 2022. Positive performance for the main global stock markets, with the FTSE MIB which reported the best performance in 2023 (+28% y/y), the takeover bids (9) were promoted at an average premium of +122.3% compared to the IPO price, with strong interest from private equity funds (7 out of 9).

EGM, the report

These are some of the findings that emerged from the study “EGM Report update – Will liquidity improve in 2024?”, published by KT&Partners which analyzes the main market trends in 2023 Euronext Growth Milan (EGM) compared to global indices, the stock performance of listed companies, the liquidity, investors institutions present, the performance of the primary market, also in terms of multiples in IPO, delistings and translistings.

In detail: in 2023 the main global stock indexes recorded a performance positive, driven by the stock market rally in November, despite the banking system crisis and concerns due to a restrictive monetary policy lasting longer than expected, in addition to the geopolitical tensions deriving from the ongoing conflict in Ukraine and the recent escalation of the conflict in the Middle East.

FTSE MIB record: +28%

The FTSE MIB reported its best performance in 2023 (+28% y/y) – reaching a peak of over 30,000 points for the first time since 2008 – outperforming the S&P500 index (+24.2%), the STOXX Europe 50 (+12 .1%) and the MSCI EM (+7.1%). Small caps recorded more limited performances, with the Germany SDAX outperforming the other indices (+17.1% y/y), while the FTSE Italia STAR ranked among the worst (+3.3%), with only the French market performed worse (-2.7% y/y).

Unlike the main Italian stock markets, in 2023 the FTSE Italia Growth recorded a negative performance of -10.2%penalized by outflows from PIR funds (€2.1 billion outgoing in 9M23 alone), in favor of alternative investments, by institutional investors who have accrued the time necessary to obtain the tax benefit on capital gains.

2023 trend and 2024 outlook

On average, the sEGM company they had no trading for 51 days in 2023, accounting for 20% of overall trading days. In terms of liquidity, in fact, the EGM market recorded the worst decline both in terms of volumes and exchange value traded (-32.6% and -35.5% y/y, respectively), also penalized by the translisting process and delisting of some of EGM’s largest companies.

As of 2023, 21 companies have left the EGM market. In particular, 16 companies delisted (double compared to 2022, with a loss in market capitalization of over €650 million), the highest number since the birth of the EGM. 9 out of 16 companies delisted following the promotion of a public takeover bid, while the remaining delisted due to lack of requirements (3), on a voluntary basis (2) or following a merger (2). The takeover bids were promoted at an average premium of +122.3% compared to the price IPO, or +20.9% compared to the last closing price before the delisting announcement. EGM companies in 2023 mainly attracted the interest of private equity funds, amounting to 7 out of 9 buyers in 2023, reversing the trend of the past, when takeover bids were usually promoted by industrial companies. Additionally, five companies moved to the main market (representing over €2.7 billion in market capitalisation)2, benefiting from an increase in average daily volumes traded of +16%, on average, since the date of translisting.

33 companies listed, +6% compared to 2022

In 2023, 33 company sare listed on the EGM market, +6 company rcompared to the previous year. The overall capital increase in 2023 was €160.3 million compared to €140.8 million in 2022 (or €283.3 million considering the Technoprobe IPO), with a growth of +13.9% y/y, and an average capital increase of €5.3 million (compared to €5.9 million in 2022)(5). In 2023, newly listed companies have averaged +19.4% performance since IPO, with 19 out of 33 companies reporting upside. The 2023 IPOs were promoted at a median EV/EBITDA multiple of 6.6x, down from the multiple of 8.8x in the 2019-22 period. To give a further boost to the EGM primary market in the coming years, Borsa Italiana has introduced the possibility for investors other than institutional ones to subscribe to a share up to 2.5% of the free float (within the minimum 10% of the share capital), increasing the number of potential investors. Furthermore, to speed up the listing process on the Italian Stock Exchange, in October 2023 the Senate of the Republic approved the “Capital Bill”, which is being examined by the Chamber of Deputies. Good news also for the tax incentive on IPOs 2024, cwhich should be restored through an amendment to the “Milleproroghe” Decree.

Will liquidity improve?

“Despite the difficulties of the adverse macro-economic scenarios, the main Italian stock indices managed to perform positively. Unfortunately, they were the our SMEs who have suffered most from this climate of instability, with the EGM market suffering from a significant flight of liquidity from investors, in particular from PIR funds. Having said that, if we look at the average premium of OPA promoted this year (equal to +122.3%) and the number of entries on the main market, it can be said that the EGM represents an important training ground and a launching pad for the most talented companies”, commented Kevin Tempestini, Founder and CEO of KT&Partners.