Lisbon stock market sees stampede of companies delisting

The decision by renewables company Greenvolt to leave the Euronext Lisbon stock market was the latest in a run of companies that have quit the stock market since 2018.

Euronext Lisbon is facing one of its worst years in terms of company exits according to the on line news source ECO.

With Greenvolt’s exit from the Portuguese stock exchange, confirmed on Thursday after the registration of the potential acquisition of the last remaining shares in the renewable energy company by private equity firm KKR, Euronext Lisbon will close 2024 with four fewer companies in its main market compared to the start of the year.

If no other companies announce their intention to delist by the end of the year, 2024 will be marked by an exodus of companies unprecedented since 2018, with the departure of Greenvolt being accompanied by the loss of Lisgráfica, Inapa and Reditus.

The year has also been particularly negative for Portugal’s stock market in general. Although the PSI, the main index at Euronext Lisbon, has posted a return of 4.3% (with dividends), the general PSI, which has all the companies listed on Euronext Lisbon, has recorded losses of 10% since the beginning of the year.

A lack of liquidity continues to be a chronic problem faced by the Portuguese stock exchange. Even larger companies face difficulties in maintaining a satisfactory trading volume to attract large investment funds and large institutional investors. This situation creates a vicious cycle: low liquidity discourages new investors, which in turn further reduces liquidity.

Reditus was the first company to delist this year, having been excluded by Euronext Lisbon itself after more than three years on the “penalty bench” for non-compliance with market information duties. The technology company, which had been on the stock exchange for 37 years, ended up seeing its shares quoted on the last day for €0.036, after in 2007 they traded above €8 and at the peak of the 2000s, shortly before the tech bubble burst, they reached €13.

Lisgráfica, in turn, approved its exit from the market in 2022, citing the costs associated with the stock market listing and the challenging economic situation as the main reasons. This decision, which took place on November 12, was another blow to the Lisbon stock exchange.

The case of Inapa is particularly dramatic. The paper distribution company lost almost 95% of its value on the stock exchange in the last days of trading, culminating in the declaration of insolvency by the court. This abrupt devaluation resulted in significant losses for the Portuguese State, one of the main shareholders through Parpública. Inapa’s situation was so serious that the company began to negotiate in the so-called “league of revitalisations”. More recently, it became clear that no investor was interested in acquiring all of Inapa, leading to the company being dismantled and its most profitable parts sold off.

Greenvolt was the latest company to beat a path to the door on Thursday after KKR purchased the last shares that were still in the hands of small investors, representing 2.36% of the renewable energy company’s capital.

This exit was the result of a IPO launched by KKR at the end of 2023 which initially was voluntary but ended up being a hostile takeover.