Shares in Dutch payments company Adyen soar 70% after hot IPO
Amsterdam: Shares in Adyen, (ADYEN_w.AS), which handles the payments backend for Netflix (NFLX.O), Facebook (FB.O) and eBay (EBAY.O), surged more than 70 percent at the start of trading on Wednesday following its initial public offering.
Shares had been priced on Tuesday at 240 euros, the top of their indicated range, suggesting a market capitalisation of 7.1 billion euros (6.36 billion pounds). Their first trade on Wednesday was at 400 euros, an increase of two-thirds.
After several European IPOs were pulled in May, bankers may hope the strong interest in Adyen spills over into other upcoming deals, such as German online furniture retailer Home24, which was due to price on Wednesday.
Adyen’s sale was only open to institutional investors, and the company said on Tuesday it had been oversubscribed “multiple times.”
Books had been covered at the top price within an hour of the offer being launched on June 5, which the head of a syndicate involved in the float said may have been “unprecedented.”
Adyen’s fast growth, its flashy customer and investor lists, together with the relatively small number of shares on offer, recent strength in technology shares, and fevered M&A in the payments segment, all bolstered demand for shares of the previously little-known company, which helps retailers take customer payments and usher them through complicated payment networks quickly.
Still, there are reasons for investor caution. The issue price was more than 70 times Adyen’s 2017 earnings before interest, taxes, depreciation and amortisation of 99.4 million euros. The company, which is debt-free and profitable, says it expects to grow sales by 25-35 percent annually.
Among major risk factors in its prospectus, Adyen cited fierce competition and the fact that its top 10 clients, which also include Vodafone, Uber and Spotify, represent around 33 percent of sales.
Those high-profile clients may demand concessions or defect to competitors, as eBay did when it decided to abandon former owner PayPal for Adyen in January. It later emerged that it received as much as a 5 percent stake in Adyen in exchange.
Adyen will face competition from rivals like WorldPay WP.O, which was bought last year by U.S. credit-card processing company Vantiv for $10.4 billion.
U.S. giant PayPal (PYPL.O) agreed to buy smartphone payment terminal provider iZettle last month for $2.2 billion. Worldline bought Swiss payments processor SIX Group for $2.75 billion. [nL3N1SO5IE]
U.S. fintech rivals such as Square and Stripe are also growing quickly, and some major online retailers including Amazon (AMZN.O) and Alibaba (BABA.N) are developing their own payment systems.
Adyen’s offer is primarily a way for existing investors, which include the likes of General Atlantic, Index Ventures and Iconiq Capital, the Silicon Valley fund that is an investment vehicle for the founders of Facebook, LinkedIn and Twitter.
CEO Pieter van der Does eschewed any public appearances in the run-up to the IPO, meeting only with private investors. That makes some sense given the business-to-business nature of the company and a business model that may not be readily understood by retail investors.
Less traditional is his decision not to ring the gong or hold any celebration at the Euronext stock exchange in Amsterdam on Wednesday. Some observers were also surprised by the decision not to opt for a listing on Nasdaq.