10 October 2011 – The success of the initial public offering (IPO) market for the whole of 2011 will be decided within the next few weeks, says PwC.
During the third quarter of the year there were 121 IPOs in Europe, raising €9.4bn, PwC’s Q3 IPO Watch Report found. This compared with 85 IPOs raising €2.5bn in Q3 2010.
However, of the money raised this quarter, €7.4bn was generated from four IPOs: €5bn came from the July privatisations of government-owned assets in Spain and Poland and €2.4bn from the IPO of Dia, the Iberian discount supermarket retailer with a strong presence in the emerging markets.
In the last few weeks, the market has slumped further due to political and market uncertainties with only €23m being raised on European exchanges in September. The extent of market turmoil is reflected in the postponement of the Spanish national lottery IPO last week. In calmer times, this type of IPO would be seen as a good bet but was pulled due to the fragile market.
Petr Podlipný, capital markets expert, PwC Audit said,
“Against the most challenging IPO conditions in recent memory, the prospects for 2011 look grim unless there is a sea-change in market sentiment. The next month or so is typically a peak period for IPOs as companies tap the markets for funds after the summer.
“The recent Spanish lottery IPO being pulled is a telling indicator of current conditions in the European market. The next few weeks will be critical for how 2011 will play out.”
There has been a stream of IPO postponements and withdrawals throughout the year but the IPO pipeline remains relatively stable despite the market turmoil. There are a number of very substantial companies preparing to float their businesses on the London Stock Exchange in the first half of 2012, says PwC.
This trend is mirrored in the US with IPO numbers down 38% from 32 to 20 and money raised down 42% from €3.8bn to €2.2bn compared to last year. However, there has been an increase in the number of companies entering the shelf registration process from 67 in the same period last year to 74 now.
Petr Podlipný added,
“Despite the current market uncertainty, a number of companies continue to press on with their IPO plans hopeful that volatility will subside later this year and they are able to take advantage of improved market conditions. There remains a strong interest in London from emerging markets, most notably in the natural resources sector.
“Other companies remain undecided on IPO timing and will need to significantly gear up to get ready for IPO and access the market should prospects improve.”
About IPO Watch Europe
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 greenshoeofferings are excluded. This survey was conducted between 1 July and September 30 2011 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.
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