(Bloomberg) -- Evidence of a rebound in Europe’s initial public offerings is starting to trickle in, with two big-ticket debuts set to determine the path ahead.

A full-blown recovery in IPOs is only seen coming next year, but a few $1-billion-plus deals are already spurring optimism after two dull years. The performance of CVC Capital Partners when it starts trading on Friday and the reception for Spanish fragrance company Puig Brands SA in early May will be closely watched by others considering coming to market.

After the driest year in more than a decade, the value of IPOs in the first quarter of 2024 doubled to $5.26 billion. With both CVC and Puig securing enough demand for the entire size of their offerings across the price range within minutes of starting to take orders from investors, the second quarter is also off to a solid start.

The question now is whether that momentum can last.

“Sentiment around the IPO product can be very fragile — if we have a couple of deals which underperform, that could shut down the IPO recovery just as quickly,” said Deepak Sran, managing director, equity capital markets syndicate at BNP Paribas SA. “We are only likely to see a broader re-opening of the IPO market in 2025.”

Puig, whose brands include Jean Paul Gaultier, Rabanne and Carolina Herrera, is projected to have a market value of as much as €13.9 billion ($14.9 billion), with CVC aiming for a similar valuation. 

Meanwhile, European stocks have slipped from their record highs. The Stoxx Europe 600 marked a third consecutive weekly drop as jitters over Middle East tensions and concerns the US Federal Reserve will take its time cutting interest rates sapped sentiment. 

That fragility has been evident this week, with Luz Saude, the Portuguese hospital operator ultimately controlled by China’s Fousun International Ltd. suspending its IPO on Tuesday, citing market conditions. Earlier this month, Spanish holding company Bergé y Compañía scrapped plans for an IPO of its Astara car-distribution business

“Every bank has deals that they would have liked to launch this quarter, but didn’t because they didn’t get enough comfort around investor appetite – issuers are focused on transaction certainty ahead of launch,” Sran added.

With Puig set to reopen the Spanish market and CVC reviving Amsterdam, London’s shrinking market share is more pronounced than ever.

London and Paris are still the two biggest exchanges in the region by market capitalization, but they have attracted the smaller listings so far this year. And bankers say activity in Europe’s IPO market will remain uneven, with some skeptical about the pace of deals for the rest of the year.

Plus, investors remain wary over the outlook for interest rates, affecting demand for new stocks. The surge in borrowing costs that started in early 2022 prompted IPOs to dry up. That unease played out for German perfume retailer Douglas AG, which dropped in its Frankfurt debut last month.

While some pulled IPOs have reappeared, supporting the sense of a recovery, pricing for deals including Planisware SA and Renk Group AG has been at the bottom of their previously marketed ranges.

November’s US Presidential election is also likely to act as a brake on IPO plans in the second half.

“Elections later this year mean 2024 activity will be front-end heavy,” said Andreas Bernstorff, head of equity capital markets at BNP Paribas. The listings pipeline the bank is building now is all focused on the first half of 2025, he said.

Not everyone is betting that the latter months of the year will be quiet. Felipe Portillo, global head of equity capital markets at Banco Santander SA, said the “landmark” IPOs so far are encouraging other issuers to contemplate coming to market in the second half of 2024. Still, he also expects it won’t be until 2025 before listing activity is in full swing again.

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