London in top spot of European IPO league

Helping Europe outperform the US in first quarter

The London Stock Exchange regained its number one position for initial public offerings (IPOs) among European stock markets in the first quarter of 2010, recovering from its unaccustomed third place by offering value behind NYSE Euronext and the Warsaw Stock Exchange in the previous quarter. This helped Europe as a whole outperform the US exchanges by both number and value of IPOs during the January to March period, according to the latest IPO Watch Europe, the PricewaterhouseCoopers survey tracking the volume and value of IPOs around Europe.
There were 77 IPOs on European exchanges in the first quarter of 2010 with an offering value of EUR 4,671 mln, compared with 55 listings that raised 5,247 mln in the last three months of 2009. Both quarters showed a dramatic improvement over the dismal first quarter of 2009 when Europe managed just 16 IPOs with a combined value of just EUR 35 mln, at a time when stock exchanges were suffering severely from the worldwide loss of confidence in the capital markets and the recession.
By contrast the volume of IPOs on the US exchanges fell to 27 with an offering value of EUR 2,968 mln in the first quarter of 2010, well down on the previous quarter when 35 IPOs with an offering value of EUR 11,557 mln were recorded. It is the first time since the fourth quarter of 2008 that the offering value of IPOs in Europe has exceeded those on the US exchanges.
London led Europe in both volume and value with 20 IPOs raising EUR 2,092 mln in the quarter, up from 14 IPOs that raised 951 mln in the previous quarter. The Main Market accounted for 11 of the listings (EUR 1,816 mln) while the AIM market had eight with a total offering value of EUR 240 mln, compared with nine IPOs that raised EUR 388 mln in the last quarter of 2009. Mining company African Barrick Gold Ltd and financial services company Horizon Acquisition Co. Plc were London’s two largest IPOs raising together EUR 1,102 mln, ranking third and fourth overall in Europe.
“Cautious recovery remain the watchwords for European IPO markets as investors continue to be focused on value against a background of economic uncertainty,” said Richard Weaver, partner, Capital Markets Group, PricewaterhouseCoopers LLP. “We have seen a number of abortive attempts to get IPOs away during the first quarter, but at the same time others have been successful and raised substantial sums where pricing has proved attractive in what is still a buyer’s market.”
“London has regained its pre-eminence among the European exchanges but the upcoming general election is adding to the uncertainty among investors and the IPO market has not rebounded in line with the main indices. Investor sentiment is not negative but is notably sensitive to potential issues such as levels of leverage post-IPO.”
After London, the Deutsche Borse was in second place by value with eight IPOs raising EUR 1,745 mln, a major recovery from the last quarter of 2009 when one IPO raised just 48 mln. The difference was largely due to two listings – telecoms company Kabel Deutschland Holding AG and industrial goods and services business Brenntag AG – which together raised EUR 1,310 mln and were Europe’s two largest IPOs during the period. NYSE Euronext was in third place, down from its lead position in the last quarter of 2009, with eight IPOs raising EUR 303 mln this quarter (six raising EUR 1,907 mln in Q4 2009).
“With economic confidence across European markets remaining fragile, and with concerns over levels of government debt and political uncertainty in countries such as the UK, it is difficult to forecast when the IPO markets are likely to fully rebound,” explained Tom Troubridge, head of the Capital Markets Group, PricewaterhouseCoopers LLP. “Our prediction of the IPO markets gaining pace in the second quarter of the year may prove short-lived unless confidence shortly returns to the market . Above all, it remains a buyer’s market.”
Elsewhere in Europe, Luxembourg saw nine IPOs with a combined value of EUR 195 mln, significantly down on three months ago when it also hosted nine IPOs which together raised EUR 709 mln. However, that is still far ahead of the equivalent three months of 2009 when it had two listings that raised only 27 mln.
Borsa Italiana, part of the London Stock Exchange Group, saw just three listings on its AIM market with an offering value of EUR 10 mln. Next in order of offering value came Oslo Bors and Axess which hosted four IPOs with a value of EUR 142 mln (last quarter it had merely one listing raising 7 mln. NASDAQ OMX saw six IPOs worth EUR 99 mln (three raised 38 mln last quarter), while the Wiener Borse saw two listings with a combined value of EUR 38 mln, having had none in the last quarter of 2009.
BME (Spanish Exchanges) had two IPOs raising EUR 15 mln (one raised 12 mln the previous quarter), while neither the Athens, Swiss nor Irish exchanges witnessed any IPO activity this quarter.