Surge in IPO activity

The upward trend in IPO activity continued in Q2 2005, ahead of the implementation of the prospectus directive, according to PricewaterhouseCoopers’ latest IPO Watch Europe survey, tracking volume and value of IPOs on Europe’s main stock exchanges. There were 169 IPOs between April 1 and June 30, considerably higher than the 95 recorded in the same period of 2004 and the 98 recorded in Q1 2005.

The high level of activity drove the total offering value of IPOs up to E10,778m in Q2 2005, a notable increase compared to the E8,728m recorded in Q2 2004 and E6,143m recorded in Q1 2005. As was the case in the preceding quarter, activity was largely driven by London’s smaller companies market, the Alternative Investment Market (AIM), with a relative lack of individual high value IPOs in the quarter compared to Q2 2004.

Tom Troubridge, head of PricewaterhouseCoopers London Capital Markets Group, said: “The second quarter is traditionally strong and the arrival of the Prospectus Directive on 1 July provided an added incentive to get deals done ahead of this major change in capital market regulation across the EU.”

European markets continued to attract non-European companies in Q2 2005. In total, there were 36 listings by non-European companies across the European markets, of which 27 were on the London markets.

London’s main market saw five non-European IPOs and the continuing attractiveness of AIM to companies outside Europe was confirmed with 22 non European IPOs in the period (compared to 11 in the preceding quarter.) Luxembourg also continued to attract non European IPOs in Q2, with six Indian companies and a Sri Lankan company listing on its market. The Oslo Bors, the third most active exchange in Q2 with 14 IPOs, also saw two non European IPOs: one from Canada and one from Israel.

Euronext was the second largest market in Q2 in both activity and value terms. The Euronext markets saw a significant increase in activity with the number of IPOs rising from five in Q1 2005 to 17 in Q2 2005. This was aided by the launch of Alternext on April 15, which saw six new IPOs in the period since its launch to the end of June.

The Irish Stock Exchange joined Euronext in establishing a small companies market along the AIM model and launched the Irish Enterprise Exchange (IEX) on April 12.

Looking ahead, Tom Troubridge said: The pipeline remains strong for the second half of the year although we expect the traditional summer lull to be exaggerated by regulatory changes on 1 July. As always there is economic uncertainty particularly around high oil prices and other factors that can impact on the IPO market. However, if market conditions remain good, then we expect an active second half with continued strong interest from outside the EU.”