CVC and EQT have done everything they can to make the current IPOs of Douglas and Galderma as secure as possible. The two financial investors, therefore, have a good chance of finally being able to present successful exits via the stock exchange again. The book building of the perfumery chain from Düsseldorf and the skincare group from Switzerland is done and dusted - and there was sufficient demand to cover the supply. There was not enough demand though for a high valuation.

The market environment on the other hand is not bad at all. Many stock markets in Europe have reached record highs, volatility is moderate, and interest rate cuts are expected from June. Five companies in Europe have already gone public this year. The performance of the newcomers to the stock market so far this year is also impressive. The share prices of the armoured gearbox manufacturer Renk in Frankfurt (+67%), the night vision equipment manufacturer Theon International in Amsterdam (+25%), and the Sodexho spin-off Pluxee in Paris (+9%) are all up firmly - but these were relatively small IPOs. The Spanish fashion group Puig, the Italian sneaker specialist Golden Goose, and the German long-distance bus operator Flix are also in the starting blocks for an IPO.

The mood is hopeful in view of the IPOs that have been piling up for two years but have not materialised. The entire financial sector is keeping its fingers crossed, and CVC and EQT have also done everything they can to avoid the impression that they want to make a quick buck with their investments in highly indebted companies. In fact, in both cases, the proceeds from the Douglas and Galderma issues will be generated primarily from new shares, and the proceeds will be used to reduce debt. In both cases, the aim is to reduce the level of debt to around two and a half times the operating profit (EBITDA). This is considered the acceptable level for IPO investors. It will not trigger storms of enthusiasm if the proceeds are only used to reduce debt instead of investing in growth. However, debt reduction at least clears the way for subsequent growth investments with income from the current business, and it is undoubtedly better than offering mainly existing shares to existing shareholders. In this way, the private equity firms have at least taken the dicey issue of high debt off the table right from the start. But they are aiming for very high valuations. Both Douglas and Galderma want to be compared with costly competitors in the current book building. Douglas would like investors to orientate themselves on the valuation of its US competitor Ulta Beauty, whose valuation, including debt, is 14 times Ebitda - or even on the highly profitable LVMH subsidiary Sephora.

Galderma is similarly ambitious. The company's business oscillates between cosmetics and medicine. Depending on the division, its competitors include Botox manufacturer Allergan, cosmetics group L'Oréal and pharmaceutical company Sanofi. The Swiss make 40% of their business with Botox and hyaluronic acid, which is injected for breast augmentation. Galderma wants to achieve a valuation of almost 23 times the expected operating profit (EBITDA) in the current year - and thus almost the same valuation as the former Galderma co-owner L'Oréal, which is, however, ten times larger.

In view of the many flops in the share price performance of newcomers to the stock market over the past two years, investors are unlikely to get involved at this valuation level. This is why Douglas and Galderma, with their price ranges at the lower end, have also granted substantial discounts of up to 50% on the valuation of their peers, hoping that this will make the shares look cheap. That was the right move. Investors have burnt their fingers often enough. If the new IPOs are to be a success, they need substantial discounts on the valuation of their already listed competitors.