European IPO Markets Prove Resilient Despite Uncertainty

by Amanda Banks, Tax-News.com, London

15 January 2008

The Initial Public Offerings (IPO) markets remained strong in 2007, despite market volatility in the fourth quarter of 2007 which saw a 21% fall in activity compared to the same period of 2006, according to PricewaterhouseCoopers.

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 October to December period there were 227 IPOs on European markets compared to 288 in the fourth quarter of 2006.

The total offering value of IPOs was EUR29,069m in the fourth quarter of 2007, a decrease of 17% compared to EUR4,954m recorded in the same quarter of 2006, which was the highest quarterly figure since the IPO Watch Europe Survey began in 2001.

In terms of both volume and offering value, London was the largest market this quarter raising EUR9,349m from 80 IPOs. However, activity in London has fallen compared to the fourth quarter of 2006 when EUR5,303m was raised from 134.

According to PwC, the Spanish exchange, BME, hosted the top two IPOs of the quarter, Iberdrola Renovables, a renewable energy company, which raised EUR4,070m and Criteria Caixa Corp, an investment company, raising EUR3,452m.

London’s Main Market hosted the third largest IPO, Eurasian Natural Resources Company PLC, a Kazakhstan mining company which raised EUR2,265m. Nyrstar, a zinc and lead producer, raised EUR1,739m on NYSE Euronext and Strabag SE, a construction group focused in Austria and Germany, raised EUR1,184m listing on the Wiener Börse.

Tom Troubridge, head of the Capital Markets Group, with PricewaterhouseCoopers commented:

“The year finished relatively positively with a strong last quarter, albeit down on the record fourth quarter of 2006. London recorded only one of the largest five capital raisings with major IPOs spread across several other European exchanges. The volume of international IPOs continued to be significant with 49 IPOs raising EUR7,526m. London remained the dominant market of choice for international IPOs with 36 IPOs raising EUR6,619m.

“Looking at the year overall, Europe had another good 12 months with 801 IPOs raising EUR80,345m, slightly down on 2006. This compared with the US markets which saw 275 IPOs raising EUR46,684m. International companies again chose European exchanges over US exchanges with 128 companies raising EUR21,522m in Europe compared with 45 companies raising EUR9,661m in New York.”

Looking to 2008, Richard Weaver, partner in the Capital Markets Group with PricewaterhouseCoopers added:

“The outlook for IPOs in 2008 is far more uncertain than it has been for a number of years. The continuing credit crunch and the threat of recession in major western economies provide a gloomy backdrop for investors."

"However, the picture is far from entirely bleak as the lack of credit is driving more companies to consider the equity markets and our view is that the IPO pipeline is still healthy. We expect to see a continuance of the trend of natural resources and energy companies from developing economies looking to IPO in 2008."

London’s market share, measured by the number of transactions, fell to 35% in the fourth quarter compared to 47% in the same period in 2006.

Activity on London’s exchange-regulated AIM market has also seen a decline compared to the same quarter last year, with 54 IPOs raising EUR1,848m compared to the 89 IPOs raising EUR5,155m in the same period of 2006.

The European markets continued to attract non-European companies in Q4 2007, despite experiencing a drop in IPO activity, and hosted 49 IPOs by international companies raising EUR7,526m compared to 33 raising EUR4,732m in the fourth quarter last year.

London remains the key market in Europe for international IPOs. London’s Main Market hosted ten non-European IPOs in the quarter, including companies from Russia and Kazakhstan, raising EUR4,488m and 22 non-European IPOs on AIM which raised EUR644m.

There were also four non-European IPOs on London's PSM, raising EUR1,487m.

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