PRESS RELEASE
8 July 2008
Energy and resources companies lead the way in an otherwise depressed European IPO market
Energy and resources companies proved to be the bright spot in an otherwise depressed European Initial Public Offering (IPO) market in the second quarter of 2008, representing the bulk of capital raised, according to PricewaterhouseCoopers LLP. The firm’s latest quarterly IPO Watch Europe survey, which tracks the volume and value of IPOs on Europe’s main stock exchanges, showed that in the April to June period there were 132 IPOs on European markets, just over half the 258 recorded in the same period of 2007. This was a significant increase on the 72 IPOs in the first quarter of this year, consistent with the traditional trend for higher IPO activity in this quarter prior to the summer break.
The total offering value of IPOs on the European markets in the second quarter of 2008 was €9,424m, a dramatic reduction in money raised compared to €28,000m raised in the same quarter of 2007. The largest IPO of the quarter, raising €1,566m, was by EDP Renovαveis SA, a Portuguese renewable energy company listing on NYSE Euronext. The second largest was New World Resources, a Czech Republic mining company, which raised €1,390m through a listing on the main market in London, the main market of the Warsaw Stock Exchange (WSE) and on the Prague Stock Exchange.
Despite the depressed conditions, European markets have continued to attract non-European companies. There were 33 IPOs by non-European companies in the quarter raising a total of €3,497m, a fall in both volume and value from quarter two of 2007 when there were 39 non-European IPOs raising €8,794m. Non-European IPOs represented 25% of the European total in the quarter and money raised accounted for 37% of the total on the European exchanges in the second quarter compared with 31% a year ago.
Richard Weaver, partner, Capital Markets Group, PricewaterhouseCoopers LLP, commented: "IPO volumes in Europe were down by a half and values by some two-thirds in the quarter compared to 2007, with the only saving grace for the markets being a number of high profile listings by resources and energy companies. London continued to dominate the exchanges, raising over half of the total offering value across Europe. It also remained the destination of choice for non-European IPOs, accounting for 24 out of a total of 33."
In terms of offering value London was the largest market this quarter raising €6,298m compared with €14,808m in the second quarter of 2007. Despite London’s lead, it was one of the exchanges most affected by the volatility in the financial markets with money raised in the quarter representing only 43% of that raised in the same three months of 2007.
London also continued to lead by volume, with a 35% share of all European IPOs, albeit down from 39% a year ago. The first two quarters of 2008 have seen the WSE following behind London in volume terms, hosting respectively 25% and 28% of European IPOs. This increase in market share is being driven primarily by the recently opened New Connect market, an exchange regulated market, which generally attracts smaller offering value IPOs.
Activity on London’s AIM market fell compared to the same quarter in 2007 with 23 IPOs raising €699m in the second quarter of 2008 compared to 65 IPOs raising €3,327m a year ago.
Tom Troubridge, head of Capital Markets Group, PricewaterhouseCoopers LLP, added: "Given the current difficult economic conditions, we are unlikely to see any recovery in the European IPO market much before the start of 2009. Activity over the summer, traditionally a quiet time of the year for IPOs, looks set to be markedly lower than usual. This is not surprising since the IPO market is a lead indicator for the health of capital markets in general, which are currently in a depressed state."
A total of 33 non-European companies chose European exchanges as their destination. AIM attracted 13 non-European IPOs raising €351m. London’s PSM attracted one non-European IPO, raising €71m, Lucky Cement Ltd from Pakistan. There were ten non-European IPOs on the Main Market in London, raising €3,021m which includes the Mexican-based mining company, Fresnillo Plc and Global Investment House, a Kuwaiti financial services company. Luxembourg had six Global Depositary Receipts (GDRs) IPOs, raising €49m, all of which were from India.
The WSE was the second largest exchange by volume and money raised in the second quarter of 2008 with 37 IPOs raising €1,890m, including New World Resources which also listed in London and Prague. The activity on the exchange has increased from 19 IPOs in the same quarter of 2007 and the money raised has also increased from €960m.
NYSE Euronext was the third largest exchange by volume and money raised in the quarter with 15 IPOs raising €1,615m. Activity on the exchange fell compared to the second quarter of 2007 which saw 38 IPOs raising €2,008m.
Deutsche Bφrse hosted eight IPOs raising €330m in the second quarter of 2008, well down in both volume and value compared to quarter two of 2007 when it hosted 17 IPOs raising €3,018m.
The OMX exchanges hosted 10 IPOs raising €178m in the second quarter of 2008, a very significant fall in both volume and value of IPOs compared to quarter two of 2007 where it hosted 40 IPOs raising €1,638m.
Luxembourg hosted six IPOs in the second quarter of 2008 raising €49m, an increase in activity compared to the same quarter in 2007 which saw four IPOs on the exchange, but the money raised fell from €614m.
The Oslo exchanges, Bψrs and Axess, together hosted six IPOs this quarter raising €28m. This represents a notable fall in money raised when compared to the same quarter in 2007 which saw €667m raised from 15 IPOs.
Highly unusually, the US exchanges saw a drop in IPO activity both from the first quarter of this year and the second quarter of 2007. Just 17 IPOs were recorded, raising €3,447m, compared with 25 raising €15,588m in the first three months of this year and 79 raising €15,638m a year ago. It should be noted that a large proportion of the offering value on the US exchanges in the first quarter of this year was accounted for by a single IPO on NYSE, that by Visa Inc, which raised €11.5bn ($17.9bn) reported to be the largest IPO in the history of the US capital markets.
According to the recent report from PricewaterhouseCoopers China, the total IPO money raised for the first six months of 2008 amounted to €8,314m in mainland China and €4,215 in Hong Kong. In mainland China there were 58 IPOs in the first half of year compared to 50 in the same six months of 2007. Despite the increase in the volume of IPOs, the money raised declined from €14,912m in the first half of 2007 to €8,314m in the first six months of this. In Hong Kong there were 23 IPOs in the first half of 2008 and 34 a year ago. The IPO offering value amounted to €4,215m, a 51% fall from the first half of 2007.
