Shares in hotel room wholesaler HBX Group plunged as much as 11 per cent on their debut on Thursday, marking a weak start for one of Europe’s biggest flotations this year.
The Spanish group, which is part of the behind-the-scenes plumbing of the travel industry, was initially priced at a market capitalisation of €2.8bn but quickly slid downhill in its first two hours of trading.
The initial public offering for HBX — best known for its Hotelbeds brand — marked a partial exit for existing shareholders including buyout groups Cinven and EQT and the Canada Pension Plan Investment Board.
The flotation is viewed as a major test for Europe’s IPO markets this year, with private equity executives hoping for a rebound in activity from a post-pandemic slowdown, when buyout firms struggled to offload investments via listings.
A lack of IPOs and dealmaking activity has left private equity firms sitting on a record number of unsold assets and so-called dry powder, the amount of money in their funds not yet deployed to buy new businesses.
HBX said the value of stock sold on the Madrid stock exchange was up to €860mn depending on the exercise of an overallotment option. The offering was priced in the middle of the marketed range at €11.50, but shares were trading down 9.9 per cent at €10.36 at lunchtime, having dropped as much as 11 per cent in mid-morning trading.
Existing shareholders have retained 63.7 per cent of the company’s stock. They planned to use the proceeds from the listing to reduce the company’s debt load.
The company’s owners were hoping HBX would reach a total enterprise valuation of about €5bn in a listing, according to people familiar with the matter.
HBX gives clients ranging from Expedia to tour operators and airlines access to hundreds of thousands of rooms, some of which it has block booked in advance, which they can then offer directly to customers.
It also has a huge database of rental cars and tickets for theme parks and theatre shows. HBX says its growth relies on its ability to help clients reach travellers from fast growing markets in Asia, the Middle East and Latin America.
The European IPO market picked up last year, but the fortunes of newly-listed companies diverged markedly.
Shares in dermatology business Galderma have risen 115 per cent since EQT listed it on the Swiss stock exchange last March, but shares in beauty group Douglas are down 33 per cent since private equity group CVC floated it the same month.
Shares in Puig, a Barcelona beauty group that floated in May last year, have since fallen 26.5 per cent.
Meanwhile, other planned listings have been halted. Buyout group Permira pulled its highly anticipated listing of luxury trainer brand Golden Goose at the last minute in June, after bookrunners suggested it would price near the bottom of a previously anticipated range, the Financial Times previously reported.
In October Spanish group Europastry, which was heading for the world’s biggest “frozen croissant IPO”, delayed its planned flotation for the second time in less than four months.
One person advising private equity businesses said in response to the HBX IPO that the market was “not exactly providing much encouragement as an exit channel at the moment”.