European IPOs in worst 4Q in five years

Europe’s IPO markets suffered a dismal fourth quarter in 2008, with both value and volume falling markedly from an already poor third quarter, as stock exchanges continued to suffer from the worldwide loss of confidence in the capital markets and global economic crisis.
The latest IPO Watch Europe, the PricewaterhouseCoopers survey tracking the volume and value of IPOs around Europe, shows dramatic falls of 96% in the new money raised (from EUR 29,1 bln in the fourth quarter of 2007 to just EUR 1,24 bln in fourth quarter of 2008), and of 73% in the number of new listings (64 in the fourth quarter of 2008 compared with 233 a year ago).
This marks the lowest level of IPO activity recorded since the first quarter of 2003 which saw market confidence heavily hit by events in the Middle East.
The quarter rounded off a very depressed year for Europe which saw a total of 338 IPOs, down 58% from 813 in 2007, while total offering value in 2008 was EUR 14,24 bln, down a massive 82% on the EUR 80,37 bln raised in the previous year. The US exchanges were also in decline but suffered less, with 57 IPOs raising EUR 19,41 bln, including the Visa Inc IPO in the first quarter of 2008 on the NYSE which raised EUR 11,51 bln. As a result the US markets moved into first place by offering value in 2008 ahead of both Europe and Greater China.
The largest European IPO of the quarter was that of Guernsey-based acquisition company, Resolution Limited, raising EUR 660 mln on London’s Main Market, followed by the Polish energy company Enea which raised EUR 546 mln on the Warsaw Stock Exchange. The total offering value of all European IPOs in the fourth quarter of 2008 represented only 30% of the single largest IPO value in the same quarter of 2007.
“It is extremely hard to predict when the IPO market is likely to reopen, given the scale and depth of the economic crisis the world faces,” said Tom Troubridge, head of Capital Markets Group, PricewaterhouseCoopers LLP. “It is only likely to happen when investors see the end of the recession in sight. Capital raising in 2009 is almost certainly going to be dominated by secondary offerings, as companies look to rebuild their balance sheets and reach out to their existing investors with right issues. This means there will simply not be enough money for significant IPO investments.”
“We do not expect any sign of recovery therefore until at least the fourth quarter of this year and even then we would expect that those investors who decide to dip their toes in the water will first want to test the temperature with domestic IPOs, investing in businesses they know best. International IPOs, which have become a strong feature of London and some other markets in the past, are only likely to come back when investors feel more confident about putting their money into higher risk investments.”
However, London’s AIM market, which has been the most active of the exchanges since the IPO Watch Europe survey began, more or less came to a standstill. It hosted only nine IPOs raising just EUR 3 mln in the fourth quarter of 2008, compared with 54 IPOs in the fourth quarter of 2007 raising EUR 1,85 bln.
The Oslo Axess exchange came third in terms of offering value, with two IPOs raising EUR 11 mln but the Oslo Børs had none. NYSE Euronext was the fourth largest exchange in terms of money raised and the second largest by volume, hosting 13 IPOs which raised EUR 6 mln. In 2007 it saw 30 IPOs raise EUR 3,49 bln. OMX hosted nine IPOs, Luxembourg four and the Deutsche Börse one, none of which raised any money. None of the other European exchanges had any IPO activity this quarter.