IPO Revival In Europe Imminent?

by Robin Pilgrim, LawandTax-News, London

31 July 2009

Jefferies International Ltd, the London investment banking operation of Jefferies Inc., has surveyed European market professionals to measure sentiment about revival of the initial public offerings (IPO) markets in the UK and Europe. 83% expected the IPO market to reopen by mid-2010, among whom are included the 23% who already see a recovery taking place before the end of 2009.

Factors said in the survey to encourage more optimism include:

• More positive developments recently seen in the equity markets;
• Primary market activity becoming more growth rather than defensive-play oriented;
• A decline in company rescue financing; and
• A reduction in market volatility.

Of the respondents, 73% felt that offerings should be larger than USD200m to be successful and generate enough market liquidity, whilst less than 5% would have any interest in offerings less than USD100m. About half of those surveyed could live with an unprofitable company coming to market, provided that a clear path to profitability within one to two years could be demonstrated, but almost one third would not consider offerings by loss-makers. The survey reported that 40% of respondents believed that classic growth stories, similar to the deals priced in the US with their tech themes, would be best received at the early part of the cycle. However, 46% believed that more defensive growth companies would dominate.

What a difference a month makes: last month Jefferies executives were reported to have addressed audiences in much more pessimistic terms about market prospects.

Recommended