Companies face crunch time on IPO decisions as markets remain volatile

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4 May, 2011. - In a disappointing quarter for initial public offerings on European exchanges, deal values plummeted by 71% compared to Q4 2010 with a 27% fall in the number of floats taking place. 

There were 94 floats completed in Europe during the last quarter, raising just under €3bn but 129 IPOs in Q4 2010 generated more than €10bn. These are the findings of PwC’s Q1 2011 IPO Watch Europe survey, which tracks the volume and value of IPOs. London hosted the lion’s share of IPOs, but future activity across the entire region remains uncertain.

Against a backdrop of continuing political and economic upheaval, jittery companies are now deciding whether to shelve their IPO plans or continue to forge ahead in stormy market conditions.  

In London, there is also the further complication of the Easter Bank Holidays and the Royal Wedding prolonging the slump in activity, PwC says.      

Richard Weaver, capital markets partner, PwC said,

“Q4 2010 seemed to promise a return to health but market conditions have deteriorated significantly against a backdrop of challenging worldwide political and economic conditions.

“April and May are traditionally two of the busiest months in the IPO calendar but the continued market volatility coupled with the prolonged holiday period leaves companies with a tough decision to make.”

“They must either commit now, or postpone to a later date, hoping that investors will return to the market after the Royal Wedding flush with renewed optimism.”

The top five IPOs in Europe accounted for two-thirds of value raised this quarter, with three of these hosted in London. However, over recent days, several large companies such as BILT Paper and Topaz Energy and Marine have decided to pull floats and PwC has found many are being dissuaded by investors willing to pay significantly less than they had expected.

Richard Weaver, PwC, added:

“It’s a bitter pill to swallow for companies to be told that the value of their business has fallen dramatically from their initial valuation. Investors are now so wary that the price they are prepared to pay often doesn’t come close to matching sellers’ expectations.”

 

Notes to Editors:

 

  1. For the full, detailed breakdown of IPO activity on the European exchanges, please see the attached data tables and charts IPO Watch Europe Survey Q1 2011
  2. Previous IPO Watch Europe Surveys and annual reviews are available at http://www.pwc.co.uk/eng/publications/IPO_Watch_Europe_previous_editions.html
  3. 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 greenshoe offerings are excluded. This survey was conducted between 1 October and December 31 2010 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.
  4. About PwC                                                                                                                                                                                                                                                   PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See pwc.com for more information.

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