Star power: Small IPOs use brand names to sell shares in Europe

What do retired soccer star David Beckham, chess grandmaster Magnus Carlsen and billionaire investor Warren Buffett have in common? Their expertise is being touted in marketing small initial public offerings in Europe.

Beckham-backed Guild Esports said on Tuesday it raised £20 million ($25.6 million) in a London listing, buoyed by the rising popularity of online games. The stock will start trading on Friday, one of at least five European IPOs in the gaming sector to take advantage of booming business from people staying indoors to curb the coronavirus outbreak.

The surge in interest also extends to traditional board games. World chess champion Carlsen is in the process of listing on Oslo’s Merkur Market Play Magnus, a platform for users to learn and develop their chess-playing skills. The company plans to raise 400 million kroner ($42 million).

In the case of Buffettology Smaller Companies Inves-tment Trust’s float, its famous namesake isn’t directly involved. Boutique asset manager Sanford DeLand is seeking a minimum of 100 million pounds to invest in 30 to 50 smaller companies listed in London. The trust aims to apply Warren Buffett’s approach, also known as business perspective investing, and has an association with Mary Buffett and David Clark, the authors of the Buffettology series of investment books.

Not every company in an unusual sector has such claims to fame, though it hasn’t stopped others from planning their own floats. Gunmaker Ceska Zbrojovka Group SE is conducting an IPO in Prague and aims to use the proceeds to expand in the US, where demand for firearms has soared amid the pandemic and civil unrest. Meanwhile, Numisbing AB, which invests in and trades rare coins and collectibles, is looking to list in Stockholm this autumn.

Choppy waters

These quirky deals are tapping the market at a tricky time, with investors getting choosier as stock indexes wobble. Spiking new virus infections in Europe and a fresh bout of tightened restrictions to curb its spread are fueling fears about the region’s economic recovery. “There is a perception that the capital market is disconnected from the real economy,” said Martin Steinbach, head of Ernst & Young’s IPO business in Europe, the Middle East, India and Africa. There is a lot of liquidity in the market with interest rates low and governments pumping in new money, so demand for listed and new IPO stocks remains high, he said.

Some cracks are starting to show, however. Commercial real estate firm Epic Suisse AG on Tuesday became the first this IPO season to call off a planned float in Zurich due to “market conditions.” Lithuania’s state-owned electric utility AB Ignitis Grupe on Wednesday set IPO price guidance at the bottom end of an initial range, following in the footsteps of other recent market entrants Hensoldt AG, a military supplier, and camper-van maker Knaus Tabbert AG.

Still, stock offerings with a touch of tech are flying off the shelves. E-commerce platform Allegro’s 9.2 billion-zloty ($2.3 billion) IPO set a record in Poland on Tuesday, after increasing the original deal size and pricing shares at the top end of expectations thanks to strong investor demand.