18 April 2013, Kyiv - A surge in private equity-backed company initial public offerings during March 2013 may be the first signs of a recovery in the European IPO market.
PwC’s IPO Watch Europe Q1 2013 report found that activity for the quarter rose by almost 40% from €2.3bn to €3.2bn, compared to Q1 2012. This increase was driven by LEG Immobilien raising €1.2bn on the Deutsche Börse in the largest IPO of the year so far and a number of floats of domestic and PE-backed companies in London.
The debuts of Countrywide and Esure in London raised more than €0.9bn in March alone and represented two of the top 5 European IPOs of the quarter. These were the first UK PE-backed IPOs on London’s Main Market since AZ Electronic Materials in October 2010 and may pave the way for IPOs of other PE backed companies as the year unfolds. Overall, the PE-backed sector accounted for 47% of total proceeds in London and 28% of proceeds in Europe.
The end of the quarter also saw two further PE-backed IPOs price, with HellermannTyton in London and Moleskine in Italy, which have been admitted to trading in early April.
Mark Hughes, capital markets partner, PwC said, “The first quarter of 2013 has been encouraging. If current market sentiment persists, London-and potentially the rest of Europe-appears set for a good year with a large pipeline of businesses sizing up the market. We expect to see activity across a range of sectors throughout the year, notably banking, insurance, real estate and entertainment.
“PE houses have considered IPOs as an exit route for their investments over the past few years, however they have been dissuaded by changeable market conditions and negative sentiment from investors. The strong performance from these PE-backed IPOs will go a long way to restoring confidence and realigning the expectations of other sector players.”
The level of interest and pricing of recent IPOs has been encouraging and shows the improved sentiment from investors. Investor confidence has been given a further boost by the positive aftermarket performance from the top IPOs, with the majority either improving on or holding the offer price after IPO. The top performers were Crest Nicholson and Countrywide, which rose by c.34% and c.11%, respectively, by the end the quarter.
|Company||Money raised €mn)||Sector||Exchange|
|LEG Immobilien||1,165||Real estate||Deutsche Borse|
|Greencoat UK Wind||302||Finance||London|
|Crest Nicholson||261||Construction and materials||London|
Richard Weaver, capital markets partner, PwC added, “London IPO activity rapidly materialised after the Christmas break, almost taking the markets by surprise, as companies moved quickly to take advantage of the uptick in the FTSE index and low volatility.
“The financial markets have proved more resilient in Q1 2013. Economic factors that have dissuaded investors in recent years do not appear to have had a negative impact in Q1. These include Moody’s downgrade of the UK’s credit rating, the reduction in UK growth forecasts for 2013 and the Cypriot bailout.”
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