European IPO market shows signs of life

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Europe’s Initial Public Offering (IPO) market is displaying signs of recovery after several difficult quarters, according to the latest IPO Watch Survey conducted by PricewaterhouseCoopers.

Typically a quiet period for the IPO market, Q3 saw 44 IPOs completed raising €1.799bn compared to the same period last year which saw 28 raise €456m.

The increase in IPO activity in Q3 suggests that investors are looking at the IPO market with more confidence. Still, the figures are very low compared to economic periods prior to the downturn. The volume and value of IPOs in the third quarter of 2009 represents just 24% and 14% respectively of the IPO activity in Q3 2007.

The average amount of new money raised in Q3 increased by 12% from the same period last year but the number of IPO in Q3 dropped 35% from 2008. The five largest IPOs during the quarter accounted for 81% of the total money raised during Q3 2009, leaving just €343m raised by the remaining 39.

International companies took the lion’s share of listing across the European exchanges, accounting for 97% of the total money raised.

London continued to dominate in terms of IPO value, raising €873m from five listings. This compares with €945m raised from 19 IPOs in the same quarter of 2008. The English capital also hosted the largest IPO of the quarter which was Rushydro, a Russian power company, that raised €424m. Russia, however, failed to see even one IPO this quarter.

The US also experienced an upturn in Q3 of this year. IPO activity increased by four times in offering value, with 20 IPOs raising over €4bn, compared to 11 raising €935m in the same period in 2008.

Partner at the capital markets group of PWC, Richard Weaver said: “We believe there is cautious optimism about IPO market recovery. With investor sentiment appearing to improve, and with a pent up supply of private equity portfolio companies considering an IPO exit, we continue to believe there will be a substantial pick-up in IPO activity in the first half of 2010.”