According to the PricewaterhouseCoopers survey IPO Watch Europe

9 April 2007 — London continued to dominate among European IPO markets in 2006, taking a 45% share in terms of both offering value and number, according to the latest IPO report from PricewaterhouseCoopers.

The report IPO Watch Europe: review of the year 2006 tracks the volume and value of IPOs on Europe’s main stock exchanges throughout the year, and concludes that it was another record year for European listings. European markets raised more money than the US markets for the second year running and remained ahead of the rapidly expanding Greater China capital markets, which saw a 172% increase in total offering value.

The upward trend seen in 2005 continued last year, with the number of IPOs across Europe up 9% (from 598 in 2005 to 653 in 2006) and the offering value up 27% (from €51.6 bn in 2005 to €65.4 bn. in 2006). Europe was also a popular destination for international companies. A quarter of all new money was raised by international IPOs, despite a 6% fall in their total number.

Record levels were seen in the fourth quarter of 2006, with the average offering value per IPO reaching €116m compared to the previous record of €99m in the fourth quarter of 2005. The general trend identified in the 2005 review towards a higher offering value for IPOs continued in 2006, and the European capital markets have continued to thrive. This is also illustrated by the fact that 2006 was the first year when the value of each of the top ten IPOs exceeded €1 bn. The total value of the top ten IPOs was €23.1 bn, compared to €18.8 bn in 2005 and €14.2 bn in 2004.

Tom Troubridge, head of the PricewaterhouseCoopers London Capital Markets Group, commented on the situation:

“It has been another highly successful year for European IPOs and we have seen some interesting trends emerge during 2006. First, Global Depository Receipts (GDRs) have become a highly popular method for raising substantial funds from institutional investors in London. Europe’s top five international IPOs were all GDRs on London’s main market, accounting for more than 40% of the total offering value on the exchange. They were particularly popular with companies from Russia, India, Korea and Kazakhstan. Secondly, there has been some movement away from smaller company IPOs in favour of those of larger, more established businesses, with a consequent rise in the average offering value.”

IPOs by Stock Exchange and by sector

The London Stock Exchange remains the number one exchange, with 297 IPOs raising €29.7 bn in 2006, compared to 354 IPOs raising €18.6 bn in 2005. Driven by its attractiveness to international companies — 86 of the 118 international offerings were on London`s markets, raising €15.0 bn — London has continued to dominate European IPOs with both the largest number of IPOs and the highest total offering value.

Euronext was the second largest European market in terms of both volume and offering value. With 116 IPOs in 2006, compared to 64 in 2005, Euronext`s market share by number of IPOs has increased from 11% in 2005 to 18% in 2006. In 2006 Euronext welcomed the second-largest IPO of the year: that of the French bank Natixis, which raised €4.2bn.

The Deutsche Börse has maintained its 2005 position as the third most active stock exchange by offering value. Its 84 IPOs in 2006 raised €7.0 bn, which represents a significant increase on the previous year, when 23 IPOs raised €3.5 bn.

In contrast to a reduction in volume on the well-established AIM market, substantial growth has been seen on Europe`s major new exchange-regulated markets: Euronext`s Alternext; the Deutsche Börse’s Entry Standart; and Luxembourg`s EuroMTF, all of which were established in 2005.

The top five sectors in terms of IPO activity in 2006 were the industrial goods and services sector (130 IPOs), technology (87), financial services (42), mining (37) and media (37).

Russian IPOs

As predicted in 2005, the European capital markets have continued to thrive and have proved to be popular destinations for Russian IPOs. It was another record year for Russian IPO activity, with Rosneft, OAO Severstal and Comstar counted among the five largest international IPOs welcomed in London in 2006.

Rosneft, the Russian oil and gas conglomerate, raised €5.2 bn on London’s main market. This was the largest IPO of the year in Europe and demonstrates a trend among large Eastern European businesses for raising funds through GDRs (Global Depositary Receipts) on London’s main market.

OAO Severstal and Comstar issued the third- and fourth-largest international IPOs in London, generating €839m and €823m respectively.

Steven Berger, Partner at PricewaterhouseCoopers, commented on the perspectives of Russian IPOs:

“2006 was a record year for Russian companies raising money in London, and the pipeline of Russian IPOs for 2007 also looks promising. In order for Russian companies to succeed — to improve performance, increase market valuation and meet tightening regulatory requirements and investor needs in a competitive environment — they need to ensure that they are properly prepared to be a public company and that they can be favourably compared with IPO candidates from other parts of the world.”

The future of IPOs

Tom Troubridge, head of the PricewaterhouseCoopers London Capital Markets Group, shares his view of the future of IPOs:

“The pipeline for the remainder of 2007 is encouraging and we should continue to see a steady stream of both domestic and international companies coming to IPO in Europe. We therefore expect the IPO market to continue to be buoyant in 2007, provided there are no unexpected world events which could unsettle the markets more generally.”

IPO Watch Europe: review of the year 2006 includes comprehensive data on all IPO activity on the European exchanges during the year, comparisons with the US and Greater China markets and a section on developments in European capital market regulation.

Notes to the Editor:

1. For additional information, please contact Olesya Kuzminskaya, PR Assistant Manager.
2. IPO Watch Europe surveys all new primary market listings on Europe’s principal stock markets and market segments on a quarterly basis (including exchanges in the EU member states plus Switzerland and Norway). Listings of investment-related companies, movements between markets on the same exchange, re-admissions, reverse takeovers and greenshoe offerings are excluded. IPO watch Europe — review of the year 2006 collates data from the quarterly surveys conducted between 1 January and 31 December 2006, presenting new market listings based on their listing date.
   
   From the first quarter of 2007, our definition of the term “IPO” will be amended to include investment-related companies; however, we will continue to exclude movements between markets on the same exchange, re-admissions, reverse takeovers and greenshoe offerings.