Sluggish start for IPOs

The European public markets have gotten off to a slow start for IPOs according to the latest figures from PricewaterhouseCoopers, with a 16% drop in number between the first quarter of 2007 and the same period last year. Where Q1 2006 recorded 164 flotations, and Q4 saw 288, the first three months of the current year witnessed just 137.

Total offering value is also down by 15% to €10.6bn compared to the €12.5bn of opening quarter of last year and a whopping 70% fall on the €35bn offered in Q4 2006.

Tom Troubridge, head of the London capital markets group at PwC, said: “IPO activity was at a similar level to last year in this traditionally quiet first quarter, if you exclude investment companies which are in our statistics for the first time. Including investment companies, activity was down around 15%. Exchange regulated markets were less popular this quarter; AIM had half the number of IPOs over the same quarter in 2006 as investors continue to be cautious.”

London is on course to rule to roost in 2007. Already it has seen the €1.5bn float of Smurfit Kappa, the cardboard box maker owned by Madison Dearborn Partners, CVC and Cinven; the €1.4bn float of British retailer Sports Direct; and the €1.2bn raised by 3i Infrastructure.

In total London raised €8.5bn in Q1 2007, down slightly from the €8.8bn raised in the equivalent period last year and well off the €15bn in Q4 2006. PwC attributes the decline to the fall in AIM activity, and points to the fact that the European exchanges actually rose more money than the same time last year – €93m compared to €86m – but was down 36% from the €138m raised in the last three months of last year.

London’s domination of the of the European exchanges in 2007 follows on from its success last year as the city took a 45% share in terms of both offering value and number of IPOs. Last year was a record year for Europe as a whole as the market again surpassed the US in the raising money stakes. The total number of IPOs across Europe in 2006 was up 9% and the offering value 27%, and a quarter of all new money raised last year came from international IPOs, although there was a 6% drop in number.