Commentary

Springer Nature May Miss Out On 2020 IPO Boom

Stock markets worldwide are trading near record highs, but those valuations aren't helping Springer Nature. The publisher of scientific journals and magazines like Scientific American again delayed an IPO this week as the pandemic takes a toll on its business, Reutersreported, citing a person familiar with the matter.

It's unfortunate the publisher can't participate in the recent bumper crop of stock sales, making September the busiest month for IPOs in New York Stock Exchange history. Companies have sold almost $100 billion in stock this year, the most since the dot-com bubble, The Wall Street Journal reported.

Like that past era, technology companies are driving demand for new listings, regardless of their financial condition. Data-mining company Palantir lost $576.4 million last year on revenue of $742.3 million, but that didn't stand in the way of being valuedat about $21 billion in its market debut.

A different math applies to publishers such as Springer Nature, which had planned to sell 1 billion euros ($1.2 billion) in stock and use the proceeds to help pay down debt. The company posted revenue of 1.72 billion euros last year, and employs 10,000 people in more than 50 countries.

Its private-equity owners BC Partners and Holtzbrink Publishing Group had postponed an IPO in 2018 because of unfavorable market conditions -- an idea that now looks quaint. If Springer Nature had gone through with the IPO, it would have been the biggest one in Germany in more than a year, Bloomberg News reported last month.

The delayed IPO also shows key differences between U.S. markets and their European counterparts. Germany has seen disappointing primary stock sales this year, including those for mobile home maker Knaus Tabbert and defense company Hensoldt.

Springer Nature may want to revisit the market next year as the global economy continues to recover from the pandemic. Ideally, an effective vaccine will become widely available, helping to curb the spread of the coronavirus and giving a major lift to consumer confidence.

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