Depressed European IPO markets show an upturn in last quarter
PwC ROMANIA - 1 February 2010
Europe's IPO markets recorded a distinct upturn in activity in the fourth quarter (October to December) of 2009, with both value and volume rising markedly over the previous nine months when stock exchanges continued to suffer from the worldwide loss of confidence in the capital markets and the recession.
However, pricing proved difficult in what remains a buyers market, according to the latest IPO Watch Europe, the PricewaterhouseCoopers survey tracking the volume and value of IPOs around Europe.
There were 61 IPOs on European exchanges in the last quarter of 2009 with an offering value of €4,994m, compared with 44 listings that raised €1,375m in the previous quarter and the 64 IPOs with a value of €1,238m that were recorded in the final three months of 2008.
NYSE Euronext led on IPO value with 13 IPOs raising €1,907m (in the same quarter of 2008, it had an equal number of IPOs but they raised just €6m) followed by the Warsaw Stock Exchange (WSE) with 16 IPOs valued at €1,454m (compared to 23 lPOs a year ago, raising €555m). London was in an unaccustomed third place with 14 listings raising €951m (two more than in Q4 2008 with a value of €666m). Nine of the London IPOs were on its AIM market and raised €388m, the same number it saw in Q4 2008 with a total value then of just €3m. The remaining listings were on the Main Market and raised €563m.
Warsaw recorded the biggest IPO of the quarter, the Polish energy company, Polska Grupa Energetyczna which raised €1,407m, followed by the Dutch insurance company Delta Lloyd which listed on NYSE Euronext and raised €1,016m. The third largest, also on NYSE Euronext, was the French industrial goods company CFAO, which raised €806m, while London hosted the fourth biggest IPO, that of investment company Gartmore Group, raising €378m.
Richard Weaver, partner, Capital Markets Group, PricewaterhouseCoopers LLP, commented:
'After more than a year of being effectively closed, Europe's IPO markets are showing clear signs of opening for business again, although pricing pressures remain in what is very much a buyer's market as institutional investors strike a hard bargain. The fourth quarter was the best three months for the IPO market in terms of offering value for more than a year and with market indices generally ending 2009 on a high note, it should bode well for the coming year.'
Elsewhere in Europe Luxembourg saw eight IPOs with a combined value of €456m, a huge improvement on a year ago when it hosted four IPOs which raised no money, although it was well down on the third quarter of 2009 when it hosted seven that raised €817m.
Borsa Italiana enjoyed an improved quarter compared to the fourth quarter of 2008 with three IPOs raising €121m (none a year ago), while the Deutsche Börse hosted just one IPO valued at €48m (in Q4 2008 its solitary IPO raised no money). NASDAQ OMX saw three IPOs raising €38m (nine raising no money a year ago).
The BME (Spanish Exchanges) hosted one IPO worth €12m (compared with none in Q4 2008) as did the Oslo Børs and Axess, raising €7m (compared to two in Q4 2008 raising €11m). The SIX Swiss Exchange saw one IPO but this raised no money while the Athens exchange, the Wiener Börse and the ISE again had no IPOs this quarter.
Tom Troubridge, head of the Capital Markets Group, PricewaterhouseCoopers LLP, added:
'With markets opening up and a pipeline of listings in place, we stick to our previous forecast that European IPO markets will recover during the first half of this year, barring any major, unexpected financial shocks. Around the world, we expect Greater China to enjoy another strong year, building on its market-leading role in 2009, and the US is also expected to perform well. Europe as a whole is lagging in the race to exit the global recession and this is likely to be reflected in the slower recovery in its IPO activity, with political uncertainty in the UK also likely to act as a dampener in the near term on both domestic and international listings in London.'
For 2009 as a whole, NYSE Euronext also ended the year in first place by value with 36 IPOs raising a total of €1,908m. London was in second place with 25 listings raising €1,660m and the WSE finished in third place, hosting 38 IPOs with an offering value of €1,594m. Overall Europe saw 151 IPOs with a combined offering value of €6,834m, still less than half the 337 listings in 2008 which raised €13,957m.
United States
The US markets showed considerable recovery in the fourth quarter, with 34 IPOs accounting for €11,476m in value, a dramatic increase over the same quarter of 2008 when just three were recorded, raising a mere €189m. It was also well up on the 20 listings the markets saw in the third quarter of 2009 which raised €4,016m.
For 2009 as a whole, the US exchanges saw 68 IPOs raising €17,212m, putting the US markets in second place behind China (mainland and Hong Kong) but ahead of Europe. This compares to 57 IPOs in 2008 which raised a total of €19,092m and which included the Visa Inc IPO in the first quarter of 2008 on the NYSE which raised €11,510m.
China (mainland and Hong Kong)
'China claimed the top place by offering value in 2009 with 172 IPOs raising €42,265m, well ahead of both the US and Europe. Hong Kong hosted 73 IPOs in 2009 raising €22,542m, compared to 49 IPOs in 2008 worth €5,760m. In mainland China (Shanghai and Shenzhen stock exchanges) there were 99 IPOs during the year raising a total of €19,723m, compared to 77 IPOs with a combined value of €10,115m in 2008.'
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IPO Watch Europe surveys all new primary market equity IPOs on Europe's principal stock markets and market segments (including exchanges in Austria, Belgium, Denmark, France, Germany, Greece, Holland, Ireland, Italy, Luxembourg, Norway, Poland, Portugal, Spain, Sweden, Switzerland and the UK) on a quarterly basis. Movements between markets on the same exchange and greenshoe offerings are excluded. This survey was conducted between 1 October and 31 December 2009 and captures new market IPOs based on their transaction date. All market data is sourced from the stock markets themselves and has not been independently verified by PricewaterhouseCoopers LLP.
The Capital Markets Group in London is part of the Assurance practice of PricewaterhouseCoopers LLP. It comprises a core team of specialists who provide a broad range of services to companies and investment banks in connection with London capital market transactions. These include preparations for becoming a public company, selecting the right market and advisory team, assisting with reviewing accounting policies and GAAP conversion projects, advising on regulatory issues and undertaking financial and business due diligence investigations. The Capital Markets Group in London is part of the PricewaterhouseCoopers global network of capital markets specialists.
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