PRESS RELEASE
11 April 2008
IPO market slows dramatically and prospects for the next quarter look bleak
Reflecting current adverse market conditions, European Initial Public Offering (IPO) activity in the first quarter of 2008 has seen a sharp drop compared to the same quarter in 2007, 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 January to March period there were 70 IPOs on European markets, just over half that of the 139 recorded in the same period of 2007.
The total offering value of IPOs in the first quarter of 2008 was €1,992m, hugely down from the €10,631m raised in the first quarter of 2007 and one of the worst quarterly figures recorded since the IPO Watch Europe survey began in 2002. Of the total offering value, 74% was raised by international companies with European companes only raising €526m.
The largest IPO of the quarter was on NYSE Euronext where Liberty International, an investment company, raised €600m. Terra Catalyst Fund, also an investment company, was the second largest IPO raising €311m on the AIM market in London. The third and fourth largest IPOs of the quarter were also hosted in London with an investment fund, JP Morgan Income & Capital Trust raising €189m on the Main Market and Taewoong Co Ltd, a manufacturer of forged metal products from South Korea, raising €184m on the PSM market. The fifth largest IPO was by Kentz Corporation Ltd, an engineering and construction group, raising €178m on the AIM market.
Tom Troubridge, head of Capital Markets Group, PricewaterhouseCoopers LLP, commented:
"This has been a disappointing start to the year for IPO activity across Europe and this reflects the poor health of capital markets more broadly. The first quarter traditionally sees a lull in IPO activity but this year the decline has been particularly marked, reflecting the climate of continued uncertainty."
London continued to lead the European markets this quarter with a 29% share of all European IPOs and a total offering value of €1,025m but it has been heavily affected by market volatility as the total offering value was down 88% compared to the first quarter of 2007, where London raised €8,526m. Activity on the AIM market also fell compared to the same period in 2007 with 14 IPOs raising €613m compared to 41 IPOs which raised €1,576m.
A dramatic dip was seen in certain sectors this quarter with financial services and real estate being particularly badly hit. There were four IPOs by financial services companies compared to 18 in the same quarter of last year and only two real estate companies compared to ten in the first quarter of 2007.
Richard Weaver, partner in Capital Markets Group, PricewaterhouseCoopers LLP added:
"The market conditions are difficult for new IPOs with investors reluctant to invest against a difficult equity market backdrop and this is causing companies which had been set to float to postpone their plans. The outlook for the next quarter is pretty bleak as we do not expect many companies in the pipeline to attempt an IPO before the third quarter of this year."
The average offering value for European IPOs also fell this quarter to €34m compared to €91m in the first quarter of 2007 due to the absence of any large transactions. The European markets continued to attract non-European companies and hosted 17 international IPOs raising €1,484m, compared to the 15 international companies raising €2,471m in the same period of 2007.
London’s AIM market hosted five of the international IPOs, raising €499m, including three companies with operations in China and a South Korean company floating on London’s PSM. Luxembourg and NYSE Euronext were the destinations of choice for the remaining international IPOs.
NYSE Euronext attracted 17 IPOs this quarter, down from 25 in the same quarter of 2007 but up in terms of offering value to €620m from €566m in 2007. The largest IPO of the quarter, Liberty International, raised €600m on NYSE Euronext.
Luxembourg hosted five IPOs, raising €196m, in the first quarter of this year, compared to the same period of 2007 which saw no IPOs. All five IPOs were by international companies, indicating that the exchange is still attractive to overseas companies looking to raise money, despite adverse market conditions.
The Borsa Italiana saw two IPOs this quarter raising €106m, similar to the same period a year ago when three IPOs raised €110m.
An upsurge in activity was seen on the Polish exchange, WSE, where there were 18 IPOs compared to 12 in 2007 but the total offering value was significantly down to €43m from €197m in the same period. WSE New Connect Exchange, Warsaw’s newest exchange that opened in August 2007, hosted 14 of the 18 IPOs.
The US exchanges saw a decrease in IPO activity this quarter with 27 IPOs compared to 64 in the first quarter of 2007, however the total offering value rose dramatically due to the IPO by Visa Inc on the New York Stock Exchange (NYSE) in February which raised €11.5bn taking the total offering value for the US exchanges to €17,421m compared to €9,192m in the same period of 2007.
